Trump's 50% auto tariff on Canada affects Toyota, Honda

President Donald Trump announced a 50% tariff on all cars, trucks, automotive parts, and steel imported from Canada, set to take effect on January 1, 2027. The move, which doubles the existing 25% tariff, targets Canada's auto sector but is expected to disproportionately impact Japanese automakers Toyota and Honda, which together account for more than three-quarters of all vehicles assembled in Canada. The tariff announcement, made on August 24, followed the collapse of trade negotiations between the U.S. and Canada. Earlier talks had focused on potentially reducing the existing 25% levy to 15%. Instead, the new rate represents a significant escalation in the ongoing trade dispute. In response, Canadian Prime Minister Mark Carney has pledged retaliatory tariffs on approximately $20 billion worth of U.S. exports, scheduled to begin on September 8, 2026. The financial exposure for Toyota and Honda is substantial. According to Barclays analysts, Canadian-built vehicles accounted for almost a quarter of Honda's U.S. sales and 17% of Toyota's sales last year.