A Honda executive warned that doubling U.S. tariffs on Canadian vehicles and parts to 50% would hurt the entire auto industry. She urged the U.S., Canada and Mexico to keep a trilateral trade framework instead of relying on bilateral deals.
Honda Motor warned on Tuesday that the automotive industry faces a disastrous scenario if the U.S. and Canada cannot reach a new trade deal by the end of this year. President Donald Trump has threatened to double tariffs on Canadian vehicles and parts from 25% to 50% on Jan. 1 if the two countries don't reach a deal.
Honda calls for a trilateral deal
Jennifer Thomas, senior vice president of corporate affairs at American Honda Motor Co., spoke at a Reuters automotive conference in Detroit. According to CNBC: "That really would be catastrophic for the entire industry," Thomas said.
Thomas said that, ideally, the countries would include Mexico and reach a trilateral deal like the United States-Mexico-Canada Agreement, or USMCA. Trade associations representing Honda and every major player in the U.S. automotive industry have advocated for that broader accord and against bilateral arrangements.
USMCA review adds uncertainty
Her comments come months after U.S. Trade Representative Jamieson Greer announced the U.S. would not automatically extend USMCA. The pact moves into an annual review process instead of a 16-year trilateral extension.
However, Thomas said she is optimistic, with caution, that cooler heads will prevail and avoid the doubling of tariffs. She said she is encouraged by recent reports that the U.S. and Canada have reestablished trade talks, including easing levies on critical materials such as aluminum.
Honda's footprint and rival tariff rates
Honda is the second-largest producer of vehicles in Canada behind Toyota Motor, but many automotive officials have voiced concerns about tariff uncertainty because of the number of parts that regularly cross the borders for vehicle production. While Honda has established large operations in Canada, 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 also said some overseas countries have better tariff rates, adding she never thought North America would be put at a disadvantage like this. The Trump administration has negotiated deals with Japan and South Korea that include 15% tariffs on vehicles.
Source: CNBC
Trading involves risk.
Risk Disclaimer
