Honda revealed it would be moving a major part of its Canadian manufacturing out of Canada and to the United States in response to American tariffs and weakening EV demand.
On Monday, the company announced that production of its most popular SUV, the CR-V, will be transferred from its Ontario factory to a U.S. plant.
The decision dealt a blow to Prime Minister Mark Carney’s newly elected Liberal government, which had positioned itself as best suited to handle relations with U.S. President Donald Trump.
Honda said the $15-billion electric vehicle and battery plant expansion at its Alliston, Ont., complex would also be postponed indefinitely.
The plan, described by former prime minister Justin Trudeau as the largest automotive investment in Canadian history, was predicted to create about 1,000 jobs.
It was also a centrepiece of taxpayer-funded efforts to shift Canada’s auto sector toward electric vehicle production, in line with Liberal electrification targets.
Toshihiro Mibe, Honda’s chief executive, said at a news conference in Japan that the move to relocate CR-V production south of the border was a response to U.S. tariffs.
“We are optimizing our production strategy to reduce the effect of tariffs,” Mibe said, adding that demand for EVs was growing slower than expected.
The U.S. has imposed a 25 per cent tariff on many vehicles and auto parts made in Canada, disrupting export-heavy plants like Honda’s Alliston facility. The plant produces Civic sedans and engines and employs approximately 4,200 people.
Ontario Premier Doug Ford is facing criticism for his involvement in the initial EV project announcement in 2024, where he appeared alongside Carney’s predecessor, Justin Trudeau. Now that the project appears stalled, scrutiny has intensified.
Trudeau promised $2.5 billion in subsidies while Ford matched that figure in provincial incentives.
Ford addressed the news at an event in Pickering on Tuesday.
“I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion,” claimed Ford.
On the topic of tariffs, he backed the prime minister, saying, “I’m confident Prime Minister Carney can reach a trade deal with President Trump that keeps this relationship strong.”
Honda’s announcement follows a broader industry pullback in Canada’s EV sector.
Elsewhere in the auto sector, GM and Stellantis have both made cuts to production causing layoffs announced last week.
Stellantis suspended plans to convert a Toronto-area plant to build Jeeps, General Motors paused production of its electric commercial van in Ontario, and Ford abandoned its Oakville EV plans in favour of gasoline-powered pickups.
GM said it will lay off about 750 workers at its Oshawa assembly plant as it moves to a two-shift operation in response to changing demand and the evolving trade environment.
The company is also redirecting production to focus on building more trucks for the Canadian market.
Stellantis, meanwhile, announced a temporary shutdown of its Windsor, Ontario., assembly plant which began on May 5, affecting around 3,800 workers.
The company is restructuring production lines to avoid U.S. tariffs.