Honda Bids Farewell To Canada: Tariffs Drive Honda to Move S.U.V. Production From Canada to U.S…. Automakers are fleeing Canada en masse for good?

Canada’s new prime minister, Mark Carney, has portrayed himself as the leader best suited for dealing with a trade war with the United States… But he’s seen as “pretty hopeless, functionally speaking” during the last meeting with President Trump

Honda dit au revoir au Canada

Tariffs Drive Honda to Move S.U.V. Production From Canada to U.S.

President Trump’s trade war again tests Canada’s new government. Honda is also postponing a major electric vehicle factory in Canada.

Key Points:

1. Reason for the Move:

   • Honda relocated production of its CR-V SUV from its plant in Alliston, Ontario (Canada) to facilities in Indiana and Ohio (U.S.).

   • The shift was primarily driven by U.S. tariffs on imported vehicles, particularly those from countries without a free trade agreement with the U.S.

2. Impact of U.S. Trade Policy:

   • The U.S. imposed steel and aluminum tariffs (25% on steel, 10% on aluminum) in 2018 under the Trump administration, affecting global auto supply chains.

   • The USMCA (U.S.-Mexico-Canada Agreement), which replaced NAFTA, incentivized automakers to produce more vehicles in the U.S. to avoid tariffs.

3. Honda’s Adjustments:

   • Honda’s Indiana plant (in Greensburg) took over CR-V production to serve the U.S. market more efficiently.

   • The Alliston plant in Canada continued producing other models, such as the Honda Civic.

4. Broader Industry Trend:

   • Other automakers, including Toyota, Ford, and GM, also adjusted production locations due to trade policies.

   • The move reflects a larger shift toward regional supply chains to minimize tariff risks.

Outcome:

• Honda aimed to reduce costs and avoid tariffs while maintaining supply chain flexibility.

• The decision highlighted how trade disputes and policy changes can reshape automotive manufacturing strategies.

In the face of U.S. tariffs, Honda said on Monday that it would shift production of one of its popular vehicles from Ontario to a U.S. factory and postpone an $11 billion plan to make electric vehicles and batteries in Canada.

The announcement came less than a month after Honda denied a report in the Japanese media that President Trump’s tariffs would force it to pull back in Canada.

It also poses a major challenge for Prime Minister Mark Carney of Canada, who won a stunning victory in last month’s election after portraying himself as the leader best suited for dealing with President Trump and the trade war between the two countries.

The United States has imposed a 25 percent tariff on many Canadian autos and auto parts.

Honda’s chief executive, Toshiro Mibe, said in a news conference in Japan that the decision to move the manufacturing of the CR-V sport utility vehicle to the United States was part of the company’s plans to “optimize” production to reduce the effects of tariffs.

Honda CR-V vehicles on the assembly line in Alliston, Ontario.

He blamed sluggish growth of the electric vehicle market for the decision to hold off on an $11 billion expansion of the Ontario factory complex, which would have added battery and electric vehicle production.

The expansion, which was backed by substantial financial incentives from the governments of Canada and Ontario, was characterized last year by Justin Trudeau, the prime minister at the time, as the largest investment by an automaker in Canadian history. It was projected to employ 1,000 people and was the signature piece of a series of government-backed moves to shift Canada’s auto industry toward electric vehicles.

The majority of the CR-Vs made in Canada are shipped to the United States.

Honda CRV says Goodbye to Canada… au revoir

Ken Chiu, a spokesman for Honda Canada, said that wherever the production of specific models is moved, the company does not plan to cut “production volume or employment” at its Canadian factory. Honda currently employs about 4,200 people at its plant in Alliston, Ontario, which also builds Civic sedans as well as engines.

Mr. Carney’s office did not immediately respond to a request for comment on Honda’s decisions. He is set to swear in his new cabinet Tuesday.

The announcement by Honda is the latest in a series of moves by the auto industry to pull back plans for expansion in Canada after the imposition of tariffs by the United States.

Stellantis suspended the conversion of a factory in a Toronto suburb to make electric and gasoline powered Jeeps. It has shut down its plant in Windsor, Ontario, which makes minivans and Dodge muscle cars, for a total of three weeks and is also reducing its production schedule during the coming weeks.

General Motors’ Canadian subsidiary suspended production of an electric commercial van in Ontario. Ford’s lone Canadian assembly plant, in Oakville, Ontario, has been idle for nearly a year after the company abandoned plans to make electric vehicles there. Instead, the plant will eventually start making gasoline-powered pickup trucks.

Ingersoll GM workers informed of plant shutdown

Ford Motor Co. delays start of EV production at Oakville, Ont., plant until 2027… Now likely ‘Kaput’

Guess it’s about time for Mark Carney to kneel down before Xi Jinping seeking to reinstate auto industry?

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