A senior Honda executive said the Japanese automaker might not build an eighth assembly plant in North America unless a key trade deal is extended.
The Trump administration is currently negotiating with Canada and Mexico over the fate of the free trade deal known as USMCA.
Honda Executive Vice President Noriya Kaihara told reporters at a roundtable in Washington the automaker is close to full production capacity in North America and needs a new factory.
However, “if there is no USMCA agreement in the future, we may have to change our direction,” Kaihara said, adding the company will need to make a decision within a year or two and would like the plant to be running by around 2030.
He said currently Honda is not passing on the costs of tariffs to buyers in North America. The US imposed 50% tariffs on $20 billion of Canadian products on Saturday, and Canada said it was retaliating effective Sept. 8.
Last year, Hyundai Motor told the administration that uncertainty about USMCA was delaying its investment decisions.
“Early confirmation of USMCA’s extension would immediately unlock over $20 billion in new American investments,” the South Korean automaker said in November. “Every month of ambiguity slows job creation, site selection and technology development.”
With interest in Honda’s hybrid and other fuel-efficient models soaring as oil prices have remained high since the start of the US war with Iran, the company had its best July in seven years, with car sales up 36%.
Honda in May scrapped its long-term EV sales target, including its goal of having EVs make up a fifth of its new car sales in 2030. It now plans 15 new hybrids by 2030.
Honda indefinitely suspended its Canada EV project, an $11 billion investment plan to produce EVs and batteries. It also canceled three planned EVs for the US market.
Last year, Honda said it was shifting production of its US-bound five-door Civic hybrid model from Japan to Indiana.