Photo/Illutration A Nissan Motor Co. plant in the Mexican state of Aguascalientes (Provided by Nissan Motor Co.)

Japanese automakers and suppliers with production bases in  Mexico and Canada face being hit with punitive tariffs after Donald Trump takes office in January.

In a social media post on Nov. 25, the U.S. president-elect vowed to raise tariffs on imports from the country’s two neighbors to 25 percent.

Under the United States-Mexico-Canada Agreement (UMCA), imports and exports among the three countries are exempt from tariffs under certain conditions.

Toyota Motor Corp., Honda Motor Co., Nissan Motor Co. and Mazda Motor Corp. all operate production plants in Mexico, where labor costs are relatively low.

Toyota and Honda also assemble vehicles in the Canadian province of Ontario, an auto industry hub close to the U.S. states of Michigan and Ohio.

The companies export a substantial percentage of their vehicles built in the two countries to the United States, taking advantage of the UMCA.

The trade agreement took effect in 2020 after the first Trump administration renegotiated the North American Free Trade Agreement.

In addition, parts and materials suppliers and other auto-related companies in Mexico and Canada ship their products to the United States.

At Honda, about 30 percent of the vehicles it sold in the United States in fiscal 2023 were produced in either Mexico or Canada.

At a Nov. 6 news conference, Executive Vice President Shinji Aoyama said the impact on imports from Mexico will be enormous if Trump makes good on his campaign promises to impose 10- to 20-percent tariffs on all imports.

He said the company will resort to lobbying and other efforts to address the situation.

Aoyama said Honda will, in principle, proceed with a plan announced in April to spend about 1.7 trillion yen ($11 billion) to build electric vehicle and battery plants in Canada.

At Nissan, about 26 percent of the approximately 915,000 vehicles sold in the United States in fiscal 2023 were manufactured at its four plants in Mexico.

High tariffs on imports from Mexico are expected to deal an additional blow to Nissan, which recently announced plans to shed 9,000 workers worldwide and pare global production capacity by 20 percent due to lackluster performances in the United States and China.

Mitsui Chemicals Inc. produces plastics for auto parts in the United States and Mexico.

“If (U.S.) tariffs (on trade) with Mexico substantially rise, we are bound to be hit,” Osamu Hashimoto, president and chief executive officer, said Nov. 26. “We will have no other choice but to review the allocation (of work) between the United States, Mexico and elsewhere.”

Major auto-parts maker Denso Corp. supplies air-conditioners and other components produced at four factories in Mexico to automakers’ plants in Mexico and the United States.

“Trump has not yet taken office or decided on policies,” a company spokesman said. “We are closely monitoring the situation.”

(This article was written by Takao Shinkai in New York, Daisuke Matsuoka and Seisaku Yamamoto.)

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