Honda is at a crossroads. The Japanese manufacturer is considering building its eighth plant in North America, but the plan could be scrapped. It all depends on the fate of a key trade agreement being negotiated by the Trump administration with Canada and Mexico, namely USMCA.
According to a Reuters report cited by Honda, Executive Vice President Noriya Kaihara said the company is nearing full production capacity in the region, hence the need for a new facility. However, he stressed that the final decision will be heavily influenced by the outcome of USMCA negotiations.
“If there is no USMCA agreement in the future, we may have to change direction,” Kaihara said during a discussion in Washington. He added that Honda must make a decision within one to two years, hoping the new plant could be operational around 2030. Notably, Kaihara also mentioned that Honda is currently not passing on tariff costs to consumers in North America.
Honda's move highlights the dynamic nature of the global automotive industry. Major investment decisions like this cannot be separated from regulatory certainty in trade. If USMCA fails to be extended, it is not impossible that Honda will seek alternatives, including strengthening its production base elsewhere.
Honda is not the only manufacturer facing uncertainty. Last year, Hyundai also said that uncertainty over USMCA had delayed its investment decisions. “A quick confirmation of the USMCA renewal would immediately unlock over $20 billion in new American investments. Every month of uncertainty slows job creation, site selection, and technology development,” Hyundai said in November.
Honda's decision will have broad implications, not only for the company itself but also for the North American economy. Industry observers will closely watch every development in these trade negotiations. Will Honda still build a new plant, or will it shift its plans elsewhere? Time will tell.
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