Honda has decided to shift production of its next generation Civic hybrid from Mexico to Indiana to avoid potential tariffs imposed by the United States. This move marks the first time a Japanese car company has adjusted its supply chains in response to these tariffs. Previously, Mexico was chosen for its lower production costs, but Honda executives chose Indiana after President Donald Trump threatened tariffs on Mexican imports.
New tariffs on Canada and Mexico are set to take effect on Tuesday, with President Trump considering up to a 25% tariff. The exact tariff rate will be determined by the president. The tariffs are part of ongoing negotiations concerning border security and drug trafficking, particularly focusing on the flow of fentanyl from China.
In response to the tariff threat, Honda plans to commence production of the new Civic in Indiana starting in May 2028, with an estimated annual production of around 210,000 units. Should there be a shortage of supplies in the U.S., Honda will explore importing more vehicles from countries not affected by tariffs.
Canada and Mexico have warned of retaliatory measures if the tariffs are implemented. Canadian Prime Minister Justin Trudeau has outlined potential tariffs worth $100 billion on U.S. goods if Canada is subjected to tariffs by the U.S.
Additionally, President Trump has announced 25% tariffs on steel and aluminum imports, scheduled to take effect on March 12. Honda’s decision to relocate production underscores the impact of these tariffs on global supply chains and trade relationships.