Honda and Toyota Canada Respond to Tariff Uncertainty as U.S. Bypasses Trade Pact Protections

• Honda and Toyota will not change Canadian production plans despite new U.S. import tariffs.

• Canada and Mexico’s 2018 USMCA tariff protections were excluded from Trump’s April 2 announcement.

• Canadian officials signal readiness to retaliate if U.S. violates USMCA and WTO trade rules.

---

Honda and Toyota confirmed continued Canadian production as the Trump Administration prepares to impose 25% tariffs on global auto imports, bypassing protections Canada and Mexico secured under the 2018 U.S.-Mexico-Canada Agreement (USMCA).

The tariffs, set to take effect on April 2, revive the 2019 Section 232 national security investigation findings and apply to passenger vehicles and automotive parts. Canadian-built vehicles, which had been covered under previous exemptions, are now included in the tariffs’ scope.

Automakers Reaffirm Canadian Operations

Honda Canada stated its manufacturing facility remains operational and emphasized a continued focus on its 4,000 manufacturing associates. The company is working with its North American partners in manufacturing, logistics, and trade to understand and manage the immediate and long-term effects of the tariffs.

Toyota Canada confirmed it has no plans to alter its production in the foreseeable future, citing continued demand and stability. The company said it is engaging with federal and provincial governments to support a long-term resolution.

USMCA Auto Safeguards Omitted from Tariff Rollout

Under 2018 USMCA side letters, Canada and Mexico secured limited protections from future U.S. auto tariffs, including a 60-day delay and annual quotas for duty-free vehicle and parts exports. These provisions were designed to shield both countries from Section 232 tariffs.

However, the Trump Administration’s April 2 tariff rollout did not refer to those commitments. Instead, it immediately subjected Canadian-built vehicles to a 25% duty. Canadian officials said they expect the U.S. to honour the agreement and warned of potential retaliatory measures under the USMCA and World Trade Organization frameworks.

Government Response and Trade Tensions

Prime Minister Mark Carney spoke with President Donald Trump on March 28, but received no assurances on exemptions. Canada confirmed its right to respond if the U.S. violates trade obligations.

Mexico is also reviewing legal options. Officials from the Ministry of Economy said they are evaluating the implications for Mexican consumers and producers.

Legal experts said the USMCA auto side letters were intended to prevent Canada and Mexico from facing tariff pressure during future trade disputes. Analysts view the new tariffs as part of a broader strategy to push domestic U.S. auto production and limit foreign supply chain involvement.

The Office of the U.S. Trade Representative and the Commerce Department have not responded to the omitted side-letter protections.

Partial Source: Automotive News