A senior executive for Honda Motor Co. stated on Tuesday that the company may reconsider plans to build an eighth assembly plant in North America if a key regional trade agreement is not extended. The automaker is currently operating near its maximum production capacity in the region and indicates it requires a new facility to meet future demand.
The statement comes as the Trump administration negotiates with Canada and Mexico regarding the United States-Mexico-Canada Agreement (USMCA). The USMCA is a free trade deal that governs the movement of goods and parts across North American borders, including the automotive sector.
Honda Executive Vice President Noriya Kaihara told reporters at a Washington roundtable that the company needs to reach a decision on the new facility within the next one to two years. The automaker's current timeline targets having the new plant operational by approximately 2030. Kaihara noted that without a future USMCA agreement, the company might have to change its strategic direction regarding North American expansion.
The scale of the trade negotiations is highlighted by recent tensions, including a threat by the U.S. administration to impose 50% tariffs on all cars and trucks imported from Canada. In response, Canada announced $20 billion in retaliatory tariffs on U.S. goods. For a typical consumer or dealership, the absence of a trade deal or the imposition of such tariffs could result in significant price increases on new vehicles, potentially adding thousands of dollars to the cost of a car depending on where it is manufactured and how parts are sourced.
A reversal in Honda's expansion plans would set a precedent for other international manufacturers weighing regional investments during trade volatility. If the automaker chooses not to build, it could impact the long-term growth of the North American automotive supply chain and tax revenues for the potential host state or province. The next major milestone is expected within the next 12 to 24 months, by which time Honda stated it must finalize its decision to meet its 2030 operational goal.