In response to the tariffs imposed by President Donald Trump on imported cars, Honda Motor Co. has made the strategic decision to relocate production of its hybrid Civic from Japan to the United States. The production of the hybrid model, which commenced in Saitama prefecture in central Japan in February, is set to be moved to Honda's plant in Indiana around June or July, according to a spokesperson from the company.
The spokesperson cited various external factors, including the Trump administration's tariffs, as influential in the decision-making process. With uncertainty looming over the potential impact and timing of Trump's tariffs, Honda has identified as one of the most exposed foreign automakers in the United States. Annually importing approximately 160,000 cars from Mexico to the US, Honda faces a significant challenge, as the US is a crucial market for the brand, as well as for other Japanese automakers like Toyota Motor Corp. and Nissan Motor Co.
Despite rumors of potential production shifts from Mexico and Canada to the US in response to auto tariffs, Honda executives in Mexico have assured the government that there are currently no alterations to the company's production strategy in the country. Analysts project that Trump's proposed tariffs could drive up passenger car prices by over 14%, with Honda expected to face a 20% decline in operating profit. Comparatively, forecasts predict a 33% drop for Toyota, 56% for Subaru Corp., and 68% for Mazda Motor Corp. amid the tariff uncertainty.
Highlighting a potential reprieve for the auto industry, Trump suggested earlier this week an interim suspension of the tariffs, although specifics regarding the duration of any potential pause remained undisclosed. The auto tariffs, announced at 25% at the end of March, have come into effect for finished vehicles on April 3, with tariffs on automotive parts anticipated to follow 30 days later.