Japanese exporters are bracing for the repercussions of President Donald Trump's recent tariff impositions on imports from Canada and Mexico. The newly enforced 25 percent tariffs, effective March 4, 2025, are affecting not only U.S. consumer prices but also complicate the business operations of various sectors relying on international trade.
Among the most significantly affected entities are prominent Japanese car manufacturers, including Nissan Motor Co, Toyota Motor Corp, Honda Motor Co, and Mazda Motor Corp, which collectively exported 870,000 vehicles made in Mexico to the United States last year alone, according to data from Mexico's National Institute of Statistics, Geography and Informatics. The ramifications for these companies could be dire; Honda anticipates financial setbacks reaching approximately 700 billion yen annually if trade partners impose additional tariffs on each other's imports. Honda Executive Vice President Shinji Aoyama commented, "We are considering changing the models it produces in each region to minimize the negative impact." This shift may also set off ripples throughout the supply chain, compelling suppliers to revamp their manufacturing plans.
Further complicate matters, Japanese chemical giant, 9 is contemplating relocating production from its planned Canadian battery materials factory to the U.S. The anticipated tariffs on steel and aluminum, which could extend to semiconductors and other product categories, present additional challenges for manufacturers.
The trade tension has also spilled over to other industries, particularly agriculture. Kevin Nixon, co-owner of Nixon Honey Farm, expressed grave concerns over the tariffs' impact on the Canadian honey industry. Nixon's business exports roughly one-third to half of its honey to the U.S., the largest market for Canadian honey producers. He stated candidly, “I can only speak from the small window ... there are no winners,” emphasizing the challenges faced by producers like himself.
With the imposition of the new tariffs, Nixon points out the potential for buyers to search elsewhere for honey imports, noting, “A 25 percent tariff on honey produced in Canada could make importing from countries such as Argentina, India, or Vietnam more appealing.” The reality of price pressures means tighter margins for honey producers who already face rising costs due to adverse weather affecting production. “When you combine low production and low prices, it doesn’t bode well. And then when you add a tariff, it compounds our issues even more,” Nixon lamented.
The uncertainty surrounding the tariffs has left many producers anxious over their future transactions. Nixon recounts, “Will the tariffs come back? Maybe, maybe not. It’s going to make it tough all year to make any contracts or deals very far out.” The anticipated retaliation from Canada poses additional threats to his bottom line, with Nixon explaining how the cost of queen bees has risen to $50. “If Canada retaliates and puts tariffs on products coming from the States, we are losing on both sides,” he stated, reflecting the precarious nature of agricultural trade amid these new dynamics.
Meanwhile, these tensions are influencing American exporters as well, with predictions from Capital Economics indicating the tariffs imposed on Canada, Mexico, and China could push U.S. inflation close to 3% later this year. Economist Paul Ashworth noted, “...the tariffs will push inflation higher,” underlining concerns about the long-term impact on the economy. The heightened risk of retaliatory tariffs could keep businesses on edge.
The aerospace industry, led by Boeing, is feeling the brunt of these tariffs as well. Shares of Boeing plunged 6.6% recently, reflecting unease within the market. Boeing, responsible for much of the $100 billion U.S. trade surplus generated from aircraft exports, builds all its jets, bombers, and satellites within the United States. Nonetheless, the company’s Chief Executive Kelly Ortberg remarked, “The aerospace industry would face higher raw materials costs,” reaffirming concerns about the overall economic fallout of these trade disputes.
The trade war's escalation presents no clear winners, as highlighted by Nixon’s comments about the honey market and observed across multiple industries. Like many small family-run businesses, Nixon Honey Farm operates on thin margins; hence, the imposition of these tariffs could threaten viability.
“Governments on both sides of the border have been trying to reduce the cost of living for people,” Nixon added. “When tariffs come to play, somebody is going to pay for it. It’s not rocket science; the cost is going to get passed on to the customer somehow, and it’s not going to help with decreasing the cost of living.” With uncertainty looming, he encourages Canadians to prioritize supporting local producers as they weather increasing market pressures.