Honda executive Jennifer Thomas stated that a planned increase in U.S. tariffs on Canadian vehicles to 50% would be catastrophic for the auto industry. She urged the preservation of a trilateral trade framework involving the U.S., Canada, and Mexico.
By Hermes-Vector AI Desk
Honda Motor Co. executive Jennifer Thomas warned that a planned increase in U.S. tariffs on Canadian vehicles and parts would be "catastrophic" for the auto industry. President Donald Trump has threatened to double tariffs on Canadian vehicles and parts from 25% to 50% on Jan. 1 if a trade deal is not reached between the two countries.
Thomas, the senior vice president of corporate affairs at American Honda Motor Co., spoke during a Reuters automotive conference in Detroit. "That really would be catastrophic for the entire industry," Thomas said. She emphasized that the North American automotive sector relies heavily on cross-border supply chains, with parts regularly crossing borders for vehicle production.
Honda is the second-largest producer of vehicles in Canada, behind Toyota Motor. While the company reports that more than 60% of the vehicles it sells in the U.S. are manufactured domestically across multiple U.S. assembly plants, Thomas noted the vulnerability of the broader regional ecosystem. "I never thought I would see the North American region be put at a disadvantage like this," Thomas said, adding that some overseas countries have better tariff rates. The Trump administration has negotiated trade deals with other countries such as Japan and South Korea that include 15% tariffs on vehicles.
Thomas urged the U.S., Canada, and Mexico to preserve a trilateral North American trade framework rather than rely on bilateral deals. She stated that trade associations representing Honda and every major player in the U.S. automotive industry have been advocating for a comprehensive accord similar to the United States-Mexico-Canada Agreement (USMCA).
"Our message has been clear: We need that trilateral agreement to stay in place in order for the U.S. industry to be competitive," Thomas said. "It’s integral to our success."
The current uncertainty stems from U.S. Trade Representative Jamieson Greer’s announcement that the U.S. would not automatically extend the USMCA. Instead, the trade pact will move into an annual review process rather than receiving a 16-year trilateral extension. Trump originally negotiated the USMCA to replace the North American Free Trade Agreement, and it took effect in 2020.
Despite the threats, Thomas said she is "cautiously optimistic" that cooler heads will prevail to avoid the doubling of tariffs. She cited recent reports that the U.S. and Canada have reestablished trade talks, including discussions on easing levies on critical materials such as aluminum.
The potential tariff hike highlights the fragility of North American automotive supply chains, which depend on the seamless movement of components across borders. A shift from a trilateral framework to bilateral agreements or higher tariffs could disrupt production schedules and increase costs for manufacturers and consumers, potentially disadvantaging the North American region compared to competitors in Asia.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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