Japanese automaker Honda considers a strategic shift in its North American operations as it grapples with the effects of new tariffs imposed by the Trump administration.
According to a Fox Business report, Honda is evaluating plans to relocate portions of its automotive production from Canada and Mexico to the United States, aiming to ensure 90% of its U.S. sales come from domestically produced vehicles.
The automotive giant plans to boost its U.S. production capacity by 30% over the next few years, specifically focusing on its popular CR-V and Civic models. This expansion strategy includes adding more employees and shifts to its existing U.S. operations, reflecting a significant adjustment to its North American manufacturing footprint.
President Trump's administration has implemented a 25% tariff on all imported passenger vehicles, including sedans, SUVs, crossovers, minivans, cargo vans, and light trucks. The measure extends to crucial automobile parts such as engines, transmissions, powertrain parts, and electrical components, with provisions for possible expansion to additional components if deemed necessary.
Mexican Economy Minister Marcelo Ebrard has addressed speculation about production changes, stating that Honda executives in Mexico have confirmed no alterations to their current production plans. Honda's official stance remains measured, with the company neither confirming nor denying specific relocations.
Honda spokesperson provided the following statement:
Honda will continue to consider the optimal global production system and allocation, taking into account customer needs and market conditions based on our longstanding approach of 'building products close to the customer.' Honda has been producing automobiles in America for over 40 years and, in 2024, nearly two-thirds (65%) of Honda and Acura vehicles sold in the U.S. were built here, with 99% built in North America. Cumulatively, Honda has invested over $25 billion in its U.S. operations.
The automotive industry faces significant changes as manufacturers adapt to the new tariff landscape. Hyundai has announced a substantial $20 billion investment in U.S. manufacturing operations, with $5.8 billion allocated to construct a next-generation steel plant supporting two U.S. facilities.
Other major players in the automotive sector are also reconsidering their production strategies. Nissan's CEO, Makoto Uchida, has indicated that Trump's tariffs might necessitate production shifts away from Mexico, suggesting a broader industry trend toward increased U.S.-based manufacturing.
The National Automobile Dealers Association has raised concerns about the tariffs' impact on vehicle affordability. They emphasize that no vehicles are built or assembled with 100% domestically made parts, making price increases inevitable regardless of manufacturing location.
The Commerce Department is set to implement an additional 25% tariff on auto parts beginning May 3. While parts complying with the United States-Mexico-Canada Agreement will initially be exempt, plans are underway to develop a system for imposing tariffs on non-U.S. components by late June.
The Trump administration maintains that these tariffs will strengthen the U.S. automotive sector. The policy aims to address what the administration describes as "unfair subsidies and aggressive industrial policies" that have contributed to foreign automobile industry expansion while U.S. production has remained static.
The implementation timeline for these changes suggests a transformative period ahead for the North American automotive manufacturing landscape. Industry experts continue to monitor the situation's development and its potential effects on consumer prices and manufacturing employment.
Honda's potential production shift represents a significant response to the changing automotive manufacturing landscape under Trump's presidency. The company's consideration to move CR-V and Civic production to U.S. facilities aims to align with new tariff requirements while maintaining competitive pricing in the American market. The automaker's strategic response to tariffs demonstrates the complex relationship between trade policy and manufacturing decisions. As Honda evaluates its next steps, the outcome could significantly influence future automotive industry trends and impact thousands of workers across North America.
