Doug Ford fumes as Trump’s tariffs kill billion dollar auto expansion in Canada

Honda is pushing off a major project

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Canada’s auto industry in Ontario suffered another major blow on May 13th after Honda Canada announced it was postponing plans for its $15 billion electric vehicle expansion project in the province. 

Postponing a large scale investments

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“We decided to postpone our large-scale investments,” explained the Director, President, and Representative Executive Officer Toshihiro Mibe in an announcement on May 13th, according to CTV News. Mibe blamed Honda’s current financial woes and US tariffs for the decision. 

The automotive industry has changed

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“The automotive industry environment has changed dramatically, requiring more than ever a flexible response,” Mide said before revealing that Honda was facing financial strains. In its most recent financial report, Honda noted a significant slide in its profits. 

A slow in the electric vehicle market

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Mibe also blamed a “recent slowdown” of the electric vehicle market for its decision to push its planned production expansion of two battery planets and retooling of a vehicle assembly plant in Canada by two years. He also added Honda would continue to “evaluate the timing and project progression as market conditions change.” 

Honda’s original plan was a big boon for Ontario

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Under the original plan, Honda was set to create 1,000 new jobs and retain the 4,200 at its assembly plant in Allison. Honda also estimated it would produce 240,000 vehicles a year in Canada by 2028. However, it is unclear how the automaker will move forward.

Are Trump’s auto tariffs to blame?

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According to Mibe, Trump’s tariffs played a role in Honda’s decision to push its expansion investment in Canada and revealed that if Trump’s tariffs remained in place for a long time then the company would have to increase production capacity in the US. 

Honda’s incentives and financial assistance

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Ottawa was prepared to give Honda $2.5 billion dollars in tax credits for its expansion in Canada alongside $2.5 billion dollars in direct and indirect financial assistance from the Ontario Government. Premier Doug Ford was quick to respond to the news. 

Doug Ford’s response to the news

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Ford claimed Honda would be held "accountable" while speaking at an event on May 13th. “When I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion, they’re going to keep that facility moving forward,” Ford said. 

Photo Credit: Facebook @FordNationDougFord

Recent concerns about Honda in Canada

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Honda’s announcement came just one month after the Japanese automaker revealed that it planned to substantially increase production in the United States as a result of Trump’s auto tariffs. This announcement kicked off fears that Honda would reduce its operations in Canada. 

Honda plan to increase car production in the US

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On April 15th, reports began to emerge that Honda was considering migrating some of its production in Canada and Mexico to the United States in response to Trump’s tariffs. 

Producing 90% of Honda's vehicles in the US

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Nikkei, the world’s largest financial newspaper, was the first news outlet to report about Honda’s potential production strategy shift, and noted the company aimed to have 90% of the vehicles it manufactures for the US market built in the United States. 

Upping American production by 30%

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Honda was reportedly planning to raise its overall production in the United States by 30%, which it claimed was a direct response to Trump’s 25% tariff on imported vehicles. What this shift means for Canada and Mexico is unclear, but it likely wasn't going to be very beneficial.  

The USMCA and the auto industry

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“The United States-Mexico-Canda Agreement (USMCA) has allowed goods traded between the three countries to receive zero tariff treatment if set conditions are met,” Nikkei Asia’s Shoya Okinaga explained. 

Automakers used the trade deal

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“Japanese automakers have taken advantage of the pact and created a framework to export completed vehicles to the U.S. from Mexico and Canada where labor costs are lower,” Okinaga continued. 

Honda’s sales in the US

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According to Nikkei Asia, Honda sells 1.42 million vehicles in the United States per year, or roughly 40% of its global sales. However, only approximately one million (about 70%) of those vehicles are made in the United States. 

What Honda imports to the US from Canada

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Honda imports 500,000 vehicles into the United States each year with 300,000 of those coming from Canada. The production of Honda’s made-in-Canada CR-V SUV and Civic sedan we key points of worry for Canada. It was thought they could be subject to reductions in production as a result of the company's planned production shift. 

The problem for Ontario

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Alliston, Ontario, is home to a significant Honda factory in Canada that employs 4,200 people. Toronto Star reported at the time that the original Honda story broke that the Ontario Alliston plant could see some of its manufacturing production moved to the US, though Ford claimed that wouldn’t happen in the wake of the news. 

Doug Ford was on the case

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On April 15th, Ford told reporters that he “just got off the phone with the president of Honda Canada and they’re sending a statement out clarifying what Reuters said. He added the reports were "not accurate at all" and that Honda wanted "to increase production down in the U.S.”

Ford claimed Honda was staying in Ontario

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“They’re at 100 per cent capacity right now (stateside),” Ford continued. “We’re going to keep Honda here, and I’ll do everything I can to protect the people and their jobs.” 

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