Toyota and Honda may close some Canadian production lines if US tariffs double

August 31, 2026 at 05:09 PM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

Toyota and Honda may be forced to close some Canadian production lines if proposed additional US tariffs take effect on January 1. The two Japanese automakers, which account for more than three-quarters of vehicles produced in Canada, face a serious risk from a plan that would double the current 25% tariff rate. The US market remains their largest market, with no Chinese competitors present.

Key Facts

Toyota and Honda together account for more than three-quarters of vehicles produced in Canada.
Vehicles produced in Canada accounted for about 25% of Honda's US sales and 17% of Toyota's US sales last year.
The proposed additional tariffs would take effect on January 1 and double the current 25% tariff rate.
Toyota faced costs of about 1.4 trillion yen last fiscal year due to US tariffs.
Toyota announced a goal to invest up to $10 billion in the US within five years to expand its operations.

Production Line Closure Risk

Sector analysts state that the planned tariffs could have a devastating impact on the Canadian automotive industry and force both companies to close some assembly lines in Canada. According to a Reuters report, if the tariffs take effect, Toyota and Honda will try to redirect Canadian-made vehicles to other markets and seek ways to fill the supply gap in the US market. However, the report emphasizes that this process will be quite difficult because vehicles bound for the US are produced according to that market's regulations and other factories are at full capacity.

Supplier Uncertainty and US Investment

Supplier companies are struggling to plan for the future due to uncertainty over whether the tariffs will take effect. Toyota, which faced costs of about 1.4 trillion yen last fiscal year due to US tariffs, is focusing on increasing its production in the US. The world's largest automaker announced a goal to invest up to $10 billion in the US within five years to expand its operations.