Honda Motor Company has announced plans to shift production of its next-generation Civic hybrid from Mexico to Indiana in response to anticipated tariffs under the Trump administration.
The decision marks a significant shift in the automaker’s strategy as it looks to avoid the financial impact of new trade policies.
Honda had initially intended to manufacture the Civic hybrid in Guanajuato, Mexico, where the company opened a production facility in 2014 with an annual capacity of approximately 200,000 units.
However, with President Donald Trump threatening to impose a 25 percent tariff on goods imported from Canada and Mexico, Honda has decided to relocate production to the United States instead.
By moving Civic hybrid production to its Indiana plant, Honda aims to safeguard its supply chain from the potential financial strain of the tariffs.
The company already manufactures the Civic sedan, CR-V SUV, and Insight hybrid sedan at its Indiana facility. With this shift, Honda expects to produce around 210,000 Civics per year while exploring options to import car parts from countries that are not subject to the proposed tariffs.
Honda Chief Operating Officer Shinji Aoyama had previously hinted at adjustments in production strategy should the United States implement tariffs on imported vehicles. “We have the flexibility to produce products in each region based on customer needs and market conditions,” Honda stated following the decision to move production.
The looming tariffs are expected to significantly impact major automakers with operations in Canada and Mexico, including Ford and Stellantis.
In response to the trade policies, Stellantis has already taken steps to restart a car plant in Illinois, a move directly linked to shifting production back to the U.S. under the Trump administration.
During a February 13 call with financial analysts, Aoyama underscored the magnitude of the tariff impact, estimating it could exceed $20 billion.
In light of this, Honda has begun adjusting its production plans to mitigate financial losses by relocating some manufacturing operations from Mexico and Canada to the U.S.
In addition to the tariffs on automobiles, Trump has also introduced tariffs on steel and aluminum imports. Aoyama addressed this concern, stating that he does not foresee significant difficulties in dealing with the tariffs on raw materials like steel and aluminum. The company is exploring options to minimize the impact on production costs.
Trump’s tariff policies toward Canada and Mexico are part of broader efforts to address illegal immigration and the smuggling of fentanyl into the United States.
The administration has justified the economic pressure as a means to push both countries into taking stronger action against illegal border crossings and drug trafficking.
Honda’s decision reflects the broader challenges that international automakers face amid changing trade policies. With global supply chains deeply interconnected, companies are being forced to rethink their production strategies to avoid costly tariffs and maintain competitive pricing in the U.S. market.
As Honda moves forward with its new production plans in Indiana, the company will continue to assess how evolving trade policies could further impact its North American operations. For now, the decision to shift Civic hybrid manufacturing to the U.S. represents a proactive step to ensure continued market stability amid shifting economic and political landscapes.