International automotive giant Honda has poured cold water on widely reported claims it was scoping out a major restructuring of its North American manufacturing supply chain in response to US tariffs — a move that would include shifting some car production from Canada south of the border.
The Tokyo-headquartered carmaker, according to an article in Japanese news outlet Nikkei earlier today, was now targeting rolling out 90 per cent of the vehicles it sells in the US from plants in that country, which could have resulted in assembly of its high-volume Civic and CR-V models moving out of its historic factory in Ontario.
But Honda said the news was “not [based on] an announcement by Honda,” adding that manufacturing at its Alliston plant would “operate at full capacity for the foreseeable future and no changes are being considered at this time.”
“We constantly study options for future contingency planning and utilize short-term production shift strategies when required, to mitigate negative impacts on our business,” a Honda spokesperson said, in an emailed statement, noting that sales in Canada were up nine per cent in the first quarter of this year, “led by the Canadian-built Honda Civic and the CR-V.”
Almost 70 per cent of all Honda vehicles sold in Canada are manufactured domestically, and 99 per cent are built using North American supply chains, he said, adding that this “local manufacturing approach” afforded the company the flexibility to “quickly adapt to various market conditions across the region.”
The spokesperson told Canada’s National Observer that the company’s North American electric vehicle (EV) strategy was “status quo, [the] ship continues to sail,” with preparatory work ongoing at the Alliston site, where it is developing a “full supply chain” industrial EV manufacturing cluster as part of a $15 billion investment in the province.
Supply chain question marks
Though industry concerns might have been allayed by Honda’s statement, sizeable question marks continue to hang over the long-term future of auto manufacturing in Ontario, with General Motors today shuttering its CAMI assembly plant in Ingersoll, in expectation of reopening this autumn at “half capacity,” as the impact of the US’ 25 per cent levy on the auto sector deepens.
Canadian Prime Minister Mark Carney, campaigning ahead of the federal election in Saint-Eustache, PQ, said, responding to a question in French, that the country faced economic “attacks” and needed to respond.
“This is a war. There will be attacks. We can only reinforce [Canada’s auto sector] with incentives for automakers to continue building in Canada and so to protect our workers,” Carney said, adding that a collateral benefit would be bolstering an integrated Canada-US supply chain that was “one of the crown jewels of North American manufacturing.”
He pointed to the government’s launch today of a “performance-based” remission framework that would allow automakers that continue to manufacture cars in Canada to import a certain number of US-assembled, CUSMA-compliant vehicles into the country, free of retaliatory tariffs.
The incentives build on the $2 billion fund unveiled by the Liberals last month to develop an “all-in-Canada” auto supply chain. In 2023, Canada imported $2.3 billion in EVs and plug-in hybrids from China.
‘Chaotic’ tariffs
Ontario’s automotive sector today directly employs some 100,000 workers and accounts for $36 billion of the total $220.5 billion in provincial exports to the US market. Factories run by industry giants like Ford, GM, Stellantis, Toyota, and Honda together manufactured more than 1.5 million cars, pick-ups and SUVs last year.
The province’s lieutenant-governor, Edith Dumont, giving the throne speech on behalf of Doug Ford’s progressive conservative government to open parliament today, said the US “taking aim” at Ontario’s auto sector with tariffs meant “it has never been more important to provide the tens of thousands of autoworkers across the province an unyielding commitment.”
“Every cent of revenues raised through Canada’s reciprocal tariffs needs to be shared with workers and businesses as quickly as possible,” she said.
David Adams, CEO of Global Automakers of Canada, an industry body, said the situation was “very serious and challenging” for the sector.
“Everyone involved needs to try and not be too [reactive]. We need to still let the dust settle a little bit, before we decide what the next step is,” he said, noting that Canada’s having sidestepped the worst of the global auto sector tariffs announced by the US last week was “not ideal but a better situation that we might have been [in].”
He added he hoped the US might come to see that “its auto industry is stronger for its integration with Canada’s” and drop the tariffs.
“Everyone is sourcing components from a global supply chain wherever they get the best possible price —- to make vehicles at the best possible price. Repatriating manufacturing to the US will lead to vehicles being more expensive and that only adds to the crisis of affordability in North America,” said Adams speaking with Canada’s National Observer.
EV industry impact
The latest twist in the US-Canada trade war comes at a particularly critical time for the emerging EV supply chain as it tries to put down roots in Ontario. Global auto giants and battery-makers have pledged $46.1 billion in investments since 2021, with federal and provincial governments contributing $52.5 billion through subsidies and tax credits.
Ottawa's $100 billion strategy has already suffered setbacks as automakers postponed or shelved projects in response to slowing domestic EV demand and battery makers were confronted with lower prices and tighter margins in a competitive global market dominated by Chinese rivals.
The Ontario government, in its throne speech, pledged to “continue to stand firmly behind” the provincial auto industry.
Bentley Allan, a professor at Johns Hopkins and principal at the Transition Accelerator, a think tank, believes the latest tariff turmoil should galvanize the provincial and federal governments around a made-in-Canada industrial action plan.
“Canada and Ontario can respond to Trump’s tariffs by reimagining the Canadian auto sector to build a made-in-Canada supply chain,” he told Canada’s National Observer. “In fact, building more resilience from the US will allow Canada to orient its auto sector to the electric future rather than to its volatile neighbour.”
Automaker investment, he added, was “a critical piece” of the country advancing a “coherent strategy with government procurement and other incentives for Canadians to purchase [domestically produced] EVs.”
Bea Bruske, president of the Canadian Labour Congress (CLC), the country's largest trade union, said Honda's "walk-back" would be a relief to workers employed at the Alliston plant and in the wider auto sector, "but the emotional stress of the past 12 hours is a reminder of the deep uncertainty workers are facing under the constant tariff threats and trade instability."
Comments
One thing a Canadian workforce offers is the displacement of a significant segment of private health benefit packages with universal public health coverage, making labour benefits less expensive in Canada.