- President Trump announced 50% tariffs on Canadian cars, trucks, auto parts, and steel, effective 2027.
- Japanese automakers Toyota and Honda are particularly exposed, with Canadian-built vehicles accounting for 17% and 25% of their U.S. sales, respectively.
- JPMorgan analyst Jose Asumendi warns the tariffs could force Toyota and Honda to shut Canadian assembly lines due to rising costs.
- Ontario Premier Doug Ford has threatened to cut electricity and critical mineral exports to the U.S. if the trade war worsens.
Last week, President Donald Trump declared he is raising tariffs on all Canadian cars, trucks, auto parts, and steel to 50% starting in 2027, intensifying the trade war between the United States and Canada. The automotive industry is heavily affected due to cross-border manufacturing, and Japanese automakers Toyota (TM) and Honda (HMC) face significant hardship.
According to JPMorgan Securities’ head of global auto equity research Jose Asumendi, Canadian-built vehicles accounted for nearly a quarter of Honda’s U.S. sales last year and 17% of Toyota’s. While U.S. automakers General Motors, Ford, and Stellantis will also be impacted, Toyota and Honda produce more than three-quarters of all cars made in Canada, according to Reuters research.
New tariffs could force these companies to shut some Canadian assembly lines because production would become economically unfeasible. Toyota builds some RAV4 SUVs in Canada, and Honda produces CR-V SUVs there, both shipped to U.S. dealers and likely affected by surging materials and shipping costs.
In response, Ontario Premier Doug Ford threatens to cut off electricity and critical minerals to the U.S. if the trade war worsens. Trump has long accused Canada of taking advantage of the U.S. and recently called Canadian negotiators “nasty.” Both Honda and Toyota stocks have risen over 5% in the past month, but recent growth could stall as tariff threats continue.
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