Trump's 50% Tariff on Canada May Pressure Toyota and Honda Profits
nashnova research
Trump announced a 50% tariff on all Canadian-made vehicles starting January, putting Toyota and Honda — which together account for over 75% of Canada's auto output — at the center of the fallout, with profits and share prices at risk.
Why are Toyota and Honda hit hardest?
Toyota and Honda together produce over 75% of Canada's vehicles, most of which are exported to the U.S.
About 15% of Toyota's U.S. sales come from Canadian plants; for Honda, the figure tops 20%.
This means → once the tariff takes effect, roughly one in every five to seven cars each company sells in the U.S. faces a direct surcharge.
How much profit is at stake?
UBS estimates that if both the U.S. and Canada raise vehicle import tariffs to 50%, Toyota's earnings per share would fall about 4% by the fiscal year ending March 2028; Honda's would fall about 7%.
That only covers finished vehicles — UBS analyst Kohei Takahashi noted that parts tariffs are not yet included, and "the impact would be larger if the entire supply chain is factored in."
Tokai Tokyo Intelligence Lab's Seiji Sugiura modeled a worst case: if Canadian-made vehicles fully absorb a 50% tariff and lose the U.S. business entirely, Toyota's operating profit drops roughly 10%, while Honda's (excluding EV-related losses) drops about 30%.
Why haven't their shares moved?
Despite clear risks, neither Toyota's nor Honda's stock has moved significantly over the past two weeks.
Sugiura's explanation: "The market broadly views this as a negotiating tactic and is taking a wait-and-see stance."
In plain terms = investors are betting this is a bargaining chip, not final policy — so they haven't repriced the risk yet.
What can the automakers actually do?
The most obvious lever is raising prices, but Takahashi cautioned that with U.S. affordability tightening and mid-size SUV competition intensifying, "deciding to raise prices just because costs go up is extremely difficult."
Toyota has supply shortfalls in Japanese minivans and the Land Cruiser in emerging markets, giving it room to raise prices elsewhere; Honda draws roughly half its revenue from North America and would have to pass costs through locally.
This reflects a gap in flexibility: Toyota has a cushion from pricing power in other regions, while Honda's room to maneuver is visibly narrower.
Is relocating production a real option?
Expanding U.S. capacity or redirecting Canadian output to other markets is seen as a potential response.
But Takahashi stressed that U.S. midterm elections fall in November and the next presidential election is in 2028 — "there are simply too many variables to make major decisions such as where to build a plant."
In plain terms = policy could reverse at any point, and a multi-billion-dollar factory might lose its rationale before it's even built — that is the core reason automakers haven't committed to moving.
市场有风险，内容仅供研究参考，不构成投资建议。