Honda has reportedly decided to produce its next generation Civic hybrid in Indiana rather than Mexico to avoid the brunt of tariffs the United States is expected to put in place this week.
Honda’s decision regarding one of its top selling models would be the first by a Japanese car company to reorient its supply chains around the potential tariffs, according to Reuters. Mexico was previously seen as a lower cost location for car-making to avoid higher labor costs in Canada and the United States, but Honda executives turned toward Indiana after President Donald Trump threatened to levy 25% tariffs against Mexico.
New tariffs are expected to go into effect from the United States on Canada and Mexico on Tuesday. While Trump has threatened a maximum tariff of up to 25%, Commerce Secretary Howard Lutnick said on Sunday that the level of tariffs to go into place Tuesday will be decided by the president.
Trump is “thinking about right now how exactly he wants to play it with Mexico and Canada, and that is a fluid situation. There are going to be tariffs on Tuesday on Mexico and Canada. Exactly what they are, we’re going to leave that for the president and his team to negotiate,” Lutnick said.
The Commerce Secretary said that the president is negotiating with Canadian and Mexican officials over border security and the flow of drugs into the United States. Lutnick said U.S. neighbors had done good work on the border that has led to a drastic decrease in illegal immigration to the United States, but more work needs to be done on the flow of fentanyl from China.
I had the pleasure this morning to join @MariaBartiromo to discuss how the Trump Administration is Making America Great Again by securing the border, imposing tariffs, strengthening our economy, and standing up for the American people on the world stage. pic.twitter.com/Mbt65fw7sU
— Howard Lutnick (@howardlutnick) March 2, 2025
Trump has also announced new 25% tariffs on all steel and aluminum imports. Those tariffs are expected to go into effect on March 12.
Honda has redrawn its future production plans because of the tariff threat and now expects to build its new version of the Civic in Indiana beginning in May 2028. The car manufacturer plans to have an annual production of roughly 210,000. If supplies in the United States fall short, it will work to import more vehicles from non-tarriffed countries, according to Reuters.
Canada and Mexico have threatened retaliation if Trump moves forward with the tariff threat. Canadian Prime Minister Justin Trudeau has detailed about $100 billion-worth of tariffs on U.S. goods to go into effect if Trump’s tariffs hit Canada.
