Trump's Policy 'Victimises' Toyota and Honda, Potential for Closures
US President Donald Trump has proposed a 50% tariff on car imports from Canada. This policy has the potential to hit Toyota and Honda, which are the largest players in the Canadian automotive industry.
Toyota and Honda account for more than three-quarters of Canada’s car production. If the tariff comes into effect on 1 January 2027 as planned, both Japanese manufacturers could potentially cut or close several production lines in Canada.
“If you truly want to destroy the Canadian automotive industry, you could do it with this tariff,” said Julie Boote, an automotive analyst at Pelham Smithers Associates, London, as quoted by Reuters on Monday (31/8/2026).
“Toyota and Honda would likely have to close several of their assembly lines in Canada,” she stated, highlighting the threat of closures.
According to analysts at Barclays, the impact is significant because Canada serves as a vital production base for the US market. Cars manufactured in Canada accounted for nearly 24% of Honda’s sales in the US and approximately 17% of Toyota’s sales last year.
Both companies are the major producers most exposed to Trump’s plan to increase tariffs from the current 25% to 50%. Toyota exports several important models from Canada to the US, including the RAV4, while Honda ships the CR-V.
This tariff policy arrives as Japanese automakers also face competitive pressure from low-cost Chinese electric vehicles (EVs) in Southeast Asia, Europe, and Latin America. The US remains the largest market for Toyota and Honda, and is also a market relatively protected from Chinese competitors such as BYD.
Toyota has been working to reduce its dependence on production outside the US by increasing its investment in the United States. The company plans to invest up to US$10 billion (approximately Rp177 trillion) over five years to expand its US operations, including the construction of a US$3.6 billion (approximately Rp64.7 trillion) plant in Texas.
For Honda, the tariff pressure comes as the company attempts to reverse its loss-making automotive business. “This would represent a major shift from the past,” said Seiji Sugiura, a senior analyst at Tokai Tokyo Intelligence Laboratory, regarding the potential changes to the supply chain due to the tariffs.
Meanwhile, an executive from a Japanese supplier stated that they have chosen “not to overreact,” adding that it remains unclear whether the policy will actually be implemented.