Toyota, Honda Shares Rise on Possible U.S.-Canada Auto Tariff Cut

Shares of Toyota Motor and Honda Motor climbed on Thursday as investors welcomed reports that the United States is considering lowering tariffs on vehicles manufactured in Canada, a move that could ease costs for Japanese automakers with major Canadian production operations.

Toyota Motor shares gained 3.7% to 3,050 yen in Tokyo trading by 04:47 GMT, while Honda Motor rose 1.5% to 1,737 yen. The gains followed reports of progress in U.S.-Canada trade negotiations that could result in lower auto import tariffs.

The Trump administration is considering reducing tariffs on Canadian-built vehicles to 15% from the current 25% as part of a broader trade agreement with Canada, Reuters reported, citing people familiar with the negotiations.

The potential U.S.-Canada trade deal could also provide relief for the metals industry. Tariffs on Canadian steel and aluminum could reportedly be reduced to 25% from the existing 50% rate.

Toyota and Honda are positioned to benefit from any reduction in U.S. auto tariffs because both Japanese automakers operate significant manufacturing facilities in Ontario. Vehicles assembled at these Canadian plants and exported to the United States currently face higher duties, adding to production and supply-chain costs.

A reduction to a 15% tariff would lower the financial burden on Canadian-made vehicles entering the U.S. market and could improve the outlook for automakers that rely on cross-border manufacturing networks. However, the proposed tariff rate has not been finalized and remains subject to ongoing negotiations between Washington and Ottawa.

The discussions come as the United States and Canada work to settle trade disputes ahead of a broader review of the U.S.-Mexico-Canada Agreement, or USMCA, expected next year.

Investors are closely monitoring the negotiations because changes to U.S. auto tariffs could have significant implications for Toyota, Honda and other manufacturers with North American production networks. A final agreement reducing tariffs on Canadian vehicles could help ease trade-related cost pressures and support profitability across the automotive sector.