In response to American protectionist policies, Honda is preparing to make a major shift in its industrial strategy. According to the Nikkei Asia daily, the Japanese manufacturer plans to increase vehicle production in the U.S. by 30 percent within two to three years. That, of course, is a bid to sidestep the punitive 25-percent tariffs imposed by the Trump administration on imported cars and parts.
The carmaker’s goal is to manufacture up to 90 percent of the vehicles it sells in the U.S. domestically. It’s a bold step that clearly illustrates the scale of the threat posed by the auto tariffs.
End of dependence on NAFTA and CUSMA
Until now, Honda fully benefited from the free trade agreements between the United States, Canada and Mexico. Thanks to the CUSMA, the successor to NAFTA, Honda produced some of its CR-V and Civic models in Canada, in Alliston, Ontario, and imported the HR-V and Acura ADX from its Celaya plant in Mexico, where labour costs are lower.
But with the American protectionist policy calling these mechanisms into question, Honda has reportedly decided to relocate to the CR-V production from Canada to the U.S., and that of the HR-V from Mexico. A gradual operation, spread over about two years, also including adjustments in the parts supply chain.
Honda Canada confirms that the Alliston plant will continue to produce at 100-percent capacity now and in the near future, and that the 4,200 jobs there are not threatened.
Sidestepping up to $4.57 Billion USD in extra costs annually
According to Nikkei, Honda has estimated the potential cost of American import tariffs at $4.57 billion USD per year. Even if production costs are higher in the United States, this reorganization would limit the financial impacts in the long term, while strengthening its American industrial base.
Well-established presence in U.S.
It’s not as if Honda is entering virgin territory. In 2023, 70 percent of the 1.5 million vehicles sold in the United States by the manufacturer were manufactured domestically.
Honda has four major plants in the U.S., including Marysville (Ohio), where the Accord, Acura TLX, and Integra are assembled. The CR-V and Acura MDX/RDX are produced in In East Liberty, while a plant in Lincoln, Alabama builds the Odyssey, Passport, Pilot and Ridgeline. Honda’s plant in Greensburg, Indiana) assembles the Civic Hatchback and CR-V.
Some versions, such as the Ridgeline Trailsport assembled in Alabama, contain 75-percent North American content according to NHTSA (AALA) data.
Recent comments show U.S. president Trump is considering another pause in the implementation of automotive tariffs, but Honda is taking no risks. As analyst Daniel Ives of Wedbush Securities points out, this kind of large-scale business decision is not taken lightly or overnight.
