Toyota and Honda Build Three Quarters of Canada's Cars. A 50% Tariff Hits Them in January, and the CR-V and RAV4 on the Lot Were Built on the Wrong Side of the Border

Key Points:

• President Donald Trump has proposed imposing 50% tariffs on Canadian car imports starting January 1, 2027, citing grievances about Canada "ripping off" American farmers; this move primarily affects Japanese automakers Toyota and Honda, which produce most Canadian-made cars.
• Toyota and Honda rely significantly on Canadian production for their U.S. sales—about 25% for Honda and 17% for Toyota—and the tariffs could force them to shut down Canadian production lines, potentially devastating the Canadian auto industry and disrupting supply chains.
• Toyota plans to invest up to $10 billion in U.S. operations over five years, focusing on domestic production, while Honda is hesitant to expand U.S. manufacturing after the USMCA trade pact was not extended by the Trump administration.
• If Toyota and Honda vehicles become less available due to tariffs, consumers might turn to alternatives like the Mazda3 for compact cars, Hyundai Tucson for SUVs, Ford Ranger for midsize trucks, Kia Sportage for SUVs, and Volkswagen Golf R or Hyundai Elantra N for performance models, each offering competitive features and warranties.
• The proposed tariffs and their potential impacts add complexity to ongoing trade disputes, with automakers and consumers facing uncertainty about vehicle availability, pricing, and industry stability in North America.