Workers perform vehicle assembly at the Honda Motor Co. Ltd. manufacturing plant in Alliston, Ont. (Credit: Getty Images files)

Honda Motor Co. Ltd. says it is altering its manufacturing strategy so that its Alliston, Ont., plant will now produce its popular CR-V compact crossover for export to countries beyond the United States.

Until now, Honda has exported CR-Vs from its U.S. manufacturing plants.

Honda’s Canadian operations will continue to produce models for the U.S., although some of that production — roughly equal to the number of units that the company exports from the U.S. — will move to the U.S.

The changes come six weeks after U.S. President Donald Trump implemented sweeping tariffs on most of his country’s trading partners in what he called “Liberation Day.”

In response, many of those countries retaliated by imposing counter tariffs on U.S. goods. Canada was not affected by Liberation Day, but does face U.S. tariffs on its vehicles and other goods, such as steel and aluminum. It initially responded by implementing countertariffs on U.S. goods, but those have since reportedly been relaxed on many products, including automobiles.

One effect of surging protectionism is that goods produced in the U.S., including vehicles, now face higher trade barriers when exported, which could encourage some manufacturers to gear their U.S. production toward domestic consumption.

That could end up encouraging some companies that manufacture in multiple countries to use plants outside the U.S. for export purposes, as Honda is now doing by shifting some export responsibilities to Canada.

“This adjustment leverages the flexible manufacturing capabilities of our three North American CR-V production facilities to better align with customer needs and market conditions,” the automaker said in a statement.

But the U.S. market remains the largest and often the most lucrative market for many products, so manufacturing operations in Canada that export to the U.S. now face new challenges.

Historically, Honda has said it sells about 20 per cent of its Canadian-made vehicles inside the country and exports the remaining 80 per cent, primarily to the U.S. It will continue to produce some vehicles in Canada for sale to the U.S.

All automakers have been scrambling to adapt to Trump’s tariffs, which they say will raise prices for consumers, hurt sales, and ultimately erode profitability.

Other companies in Canada, including General Motors Co., Ford Motor Co. and Stellantis NV, have announced layoffs, temporarily closed plants or paused planned projects.

Earlier this week, Honda announced a two-year delay of its planned $15-billion electric vehicle and battery complex in Alliston, citing slower-than-anticipated market adoption.

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That complex had a planned production capacity of around 240,000 EVs per year. Unlike some of Honda’s other planned facilities in the U.S., which have not been delayed, the Alliston plant would not have a flexible production architecture that allows it to switch between hybrid, electric and internal combustion engine vehicles in response to market demands.

For now, however, Honda has said its existing production and employment levels in Canada will not change.

“Honda of Canada Mfg, which has been building the CR-V since 2011, will continue to produce the model as part of this realignment,” it said in a statement. “Importantly, this change will not impact Honda of Canada Mfg’s overall production volume or employment.”

The company has operated in Canada since 1986 and has never conducted layoffs, even in 2022, when production fell by one-third amid a semiconductor shortage that slowed global vehicle production.

But one insider who spoke on background said the changes regarding the CR-V could lead to incrementally higher production in the U.S.

In 2023, Honda’s U.S. production totalled around one million vehicles, including the Acura and other models, which was fewer than the 1.3 million vehicles it sold in the U.S. that year.

Trump has often said the goal of his tariffs is to repatriate manufacturing to the U.S.

“If you don’t make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff,” he said in January.

But even Trump cannot influence where companies set up manufacturing operations for sales to markets outside the U.S. His critics say tariffs make U.S. manufacturing less competitive by erecting trade barriers.

In the case of Honda, one question is whether producing for export markets outside the U.S. will lead to higher production at its Canadian operations, where Honda currently produces the Civic and the CR-V — its two top-selling models in the U.S.

For now, it said the shift affects the CR-V, not the Civic.

In 2023 — the most recent data available — Honda produced 200,000 CR-Vs in Canada, including the hybrid model. It produced 254,000 CR-Vs at its two U.S. plants in Indiana and Ohio.

EV sales in Canada dropped sharply in March, even as broader market grows Honda taps the brakes on $15-billion EV project in Ontario amid tariffs and market slowdown

Honda exports U.S.-made vehicles to 77 countries, but the CR-V represents just one of the nearly two dozen models that Honda produces in the U.S.

Honda is scheduled to release a digital fact book next week that contains sales data for 2024 and may offer more clues about the volume of exports from the U.S. to other countries.

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