Japanese car giant moves manufacturing out of US in tariff twist
The company sold over 17,700 American-built vehicles in Canada last year, making up 26 percent of its 2024 sales. But the Japanese automaker's Canadian division will slash US imports to just 10 percent by the 2026 model year, representing thousands of cars and millions of dollars lost. The biggest impact will be on the American-built Outback. The popular car will no longer ship north after 2026.
Instead, it will feature a 'made in Japan' badge. Subaru Canada's CEO, Tomohiro Kubota, said the move will 'minimize the impact of the counter surtax,' according to Automotive News Canada. For Subaru, it's cheaper to build and ship cars out of Japan than deal with the political whiplash of US trade policy.
The Japan-based manufacturer already has plants in its home country, where its supplied Canadian dealerships with high-selling Crosstrek and Forester SUVs. Subaru didn't say if the adjustment will facilitate any production or job changes in Indiana. Previously, the company said the plant will begin assembling the Forester, one of its American best-sellers, later this year. It's unclear if any of those units will end up crossing the border.
At the heart of Subaru's shift is a 25 percent import tax that Trump imposed earlier this year on vehicles from nearly every country, including Canada. Lawmakers in Ottawa snapped back with retaliatory tariffs of its own, hitting US-built cars with duties up to 25 percent. Multiple car companies have been caught in the middle. For decades, the US and Canada have enjoyed free trade agreements allowing products to flow over the borders.
American companies, including Stellantis and Ford, built giant factories in Canada, while international automakers built US plants and shipped products up north. Trump's tariffs effectively ripped up the agreements, including the USMCA agreement he renegotiated and signed during his first administration.
The President has consistently said that his trade policies will force automakers to build their vehicles in the US. So far, his tariffs have had a mixed response from automakers. Stellantis attributed a 900-job layoff to the tariffs, Honda announced that the Civic Hybrid will have a final assembly plant in the US, and GM said its ramping up production of its high-priced, American-made pickups.
Volvo also discontinued the S90 sedan from the US market. Multiple US automaker executives told DailyMail.com that American trade wars, combined with Trump's tariff waffling, have made them unsure about how to even set a price for their products.
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