Honda Exits Canada and Mexico, Consolidates Car Production in U.S.

Honda, Japan’s second-largest automaker, plans to shift most of its North American production to the United States. This move responds directly to new U.S. tariffs on imported vehicles.

The company aims to manufacture 90% of the cars it sells in the U.S. within the country. This figure marks a significant jump from the current 70% of vehicles produced locally.

Honda will move production of key models, including the CR-V and Civic, from Canada to the U.S. The company will also relocate HR-V production from Mexico to American plants.

Honda will build the next-generation Civic hybrid in Indiana instead of Mexico. These changes will require new investments and adjustments to supply chains. The U.S. market remains Honda’s largest, accounting for nearly 40% of its global sales.

In 2024, Honda sold about 1.4 million vehicles in the U.S., including its Acura brand. Of these, around 400,000 vehicles came from Canada and Mexico. The company wants to cut this number to less than 150,000 within two to three years.

Honda Shifts U.S. Strategy to Dodge Tariffs

Honda faces high costs if it continues importing vehicles from its neighbors. The new 25% U.S. tariff could cost the company up to $4.57 billion each year. By moving production, Honda aims to avoid these costs, even though U.S. labor and operations are more expensive.

To support the production increase, Honda will hire more American workers. The company will add a third shift at its U.S. plants and extend operations to weekends. This transition will take at least two years as Honda adapts its workforce and supply chains.

Other Asian automakers are making similar moves. Nissan considers shifting Rogue SUV production from Japan to the U.S. Hyundai plans to expand its U.S. manufacturing by 70% with a $21 billion investment.

Honda’s decision highlights the impact of U.S. trade policy on global manufacturing. The company’s strategy focuses on protecting its market share and profits in its most important market. This shift marks a clear response to rising trade barriers and changing economic realities in North America.