Toyota and Honda produce more than three-quarters of vehicles assembled annually in Canada.
Canadian production supplied nearly 25% of Honda’s U.S. sales and 17% of Toyota’s.
A proposed 50% U.S. tariff could challenge Canadian assembly economics and future investment decisions.
Toyota and Honda could face some of the auto industry’s largest financial and production consequences if U.S. President Donald Trump proceeds with a 50% tariff on Canadian automotive imports beginning Jan. 1, 2027.
The Japanese automakers collectively account for more than three-quarters of all new vehicles assembled in Canada. That concentration leaves their Canadian operations particularly exposed to additional U.S. duties.
The exposure extends directly into their U.S. sales. Barclays analysts estimated Canadian-built vehicles represented almost one-quarter of Honda’s U.S. volume in 2025. For Toyota, the proportion was 17%. Those were the highest percentages among major automakers.
Trump Says U.S. Will Raise Canadian Auto Tariffs to 50% in 2027
Ontario plants also supply two important utility vehicles to American dealerships. Toyota builds RAV4s in Canada for export to the United States, while Honda’s Canadian operations produce CR-Vs for the U.S. market. Both manufacturers would therefore need to determine how much tariff expense they could absorb and whether existing production patterns remain economically viable.
Canada’s auto sector produces approximately 1.2 million vehicles annually and indirectly supports about 427,000 jobs. Analysts have warned that a sustained 50% U.S. tariff could make some Canadian assembly lines difficult to maintain at current volumes.
Toyota is already directing substantial investment toward American manufacturing. The automaker previously outlined plans to invest as much as US$10 billion in its U.S. operations over five years. Its plans include a US$3.6-billion Texas assembly plant and relocating Tacoma pickup production from Baja California, Mexico. Toyota also recorded approximately US$8.8 billion in U.S. tariff costs during its previous financial year.
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Honda faces a separate investment decision. A senior company executive has indicated that plans for an eighth North American assembly plant could depend on greater certainty surrounding the United States-Mexico-Canada Agreement and its review process.
Moving Canadian production elsewhere would not provide an immediate solution. Vehicles destined for the U.S. must meet specific regulatory and market requirements, while alternative plants may lack available capacity.
The stakes for Canada extend beyond two assembly companies, as suppliers have built operations around an integrated continental manufacturing system in which vehicles and components routinely cross borders during production. A 50% tariff on Canadian automotive imports would place that model under considerably greater cost pressure.
Source: Automotive News
