Japan's automakers worry over Trump's tariff plans

Dec 05, 2024 | News On Japan

Dec 05, 2024 (NHK) - Japanese automakers are starting to worry over US President-elect Donald Trump's new tariff plan targeting Canada and Mexico. The two countries are seen as important production bases for the US market.

Both Toyota Motor and Honda Motor have plants in Canada.

The Japan External Trade Organization says Toyota is the largest car manufacturer in the country. It produced over 520,000 units there last year. The company has not released any figures, but some of its Canada-built units are exported to the United States.

Honda Motor made over 370,000 units in 2023. 77 percent of them crossed the border to the US.

Trump's first administration forced Japanese automakers to adjust their operations when the US-Mexico-Canada Agreement came into effect in 2020. The deal has tougher rules than its predecessor for duty-free auto exports.

They include an upgraded rule for the origin of auto parts and a requirement to use plants where workers earn at least 16 dollars per hour.

Japanese automakers will likely be forced to change their strategies again if Trump's 25 percent tariff on all imports from Canada and Mexico goes through.

Another focus of attention is whether the incoming Trump administration will maintain tax incentives for electric vehicle buyers, introduced under President Joe Biden. EVs using battery parts produced in North America and assembled in the region qualify for the tax breaks.

Honda has built EV and battery plants in Canada, with operations slated to start in 2028. It also launched a joint venture there with Japanese chemical major Asahi Kasei to produce battery parts.

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