Trump’s Tariff Gambit Backfires as Japanese Automakers Shift Focus, Sparking Fears of North American Auto Shake-Up

By Keith Naughton and Ana Swanson Washington — Dec. 2, 2025

President Donald J. Trump, whose aggressive trade policies have long targeted foreign automakers as a symbol of American manufacturing decline, vented his frustration in a series of late-night Truth Social posts on Monday, decrying reports that major Japanese car companies are accelerating production shifts away from the United States amid lingering tariff uncertainties. The outburst, which labeled the moves a “BETRAYAL by weak-kneed CEOs,” came as industry analysts warned that Canada — bolstered by lower energy costs, government incentives and proximity to U.S. markets — could surpass the United States in certain automotive segments by 2026, potentially eroding America’s dominance in North American vehicle assembly. With Toyota, Honda and Nissan citing a “chilling effect” from Mr. Trump’s fluctuating levies, the developments have ignited a firestorm of recriminations, with Mr. Trump blaming “deep state leaks” and Democrats hailing it as proof of his policies’ self-inflicted wounds.

The tipping point appeared to be a Bloomberg report late Sunday detailing internal memos from Toyota and Honda executives instructing U.S. plant managers to prioritize exports to Canada and Mexico over domestic expansion, citing the 15 percent tariff on Japanese imports — reduced from 27.5 percent in a September executive order — as a persistent drag on profitability. Toyota, which assembles the RAV4 and Camry at facilities in Kentucky and Indiana, has reportedly paused a $1.3 billion upgrade at its Georgetown, Ky., plant, redirecting funds to a new hybrid battery facility in Ontario. Honda, meanwhile, confirmed it would relocate Civic Hybrid production from Japan to an expanded Alliston, Ontario, site by mid-2026, a move a company spokesperson said was “partly influenced by U.S. trade volatility.” Nissan, facing a projected $1.8 billion loss from tariffs, is exploring joint ventures with Canadian suppliers to bypass U.S. duties under the U.S.M.C.A. framework.

Mr. Trump, monitoring from Mar-a-Lago during a post-Thanksgiving donor retreat, erupted shortly after midnight: “Japanese automakers FLEEING America because of my STRONG tariffs? FAKE NEWS! They’re running to Canada — LOSERS! I made the BEST deal, cut to 15% — now they stab us in the back? Tariffs GOING UP — America First means NO MORE FREE RIDES!” The posts, viewed over 28 million times by morning, amplified a Fox News chyron blaming “Biden holdovers” in the Commerce Department for the shifts, but ignored the September deal’s fine print: The 15 percent rate applies only to direct Japanese exports, not U.S.-assembled vehicles, which face parts tariffs up to 25 percent on steel and aluminum.

Analysts, poring over the fallout, painted a dire picture for U.S. auto hegemony. Sam Fiorani, vice president of AutoForecast Solutions, told The Times that Canada’s production could eclipse U.S. output in midsize SUVs and hybrids by 2026, driven by Ontario’s $15 billion EV subsidy package and cheaper hydroelectric power. “Trump’s tariffs were meant to bring jobs home, but they’re pushing investment north — Canada’s poised to gain 150,000 units annually,” Mr. Fiorani said, citing Honda’s Ontario expansion and Toyota’s battery plant as harbingers. A PwC report released Monday forecasted Canada’s auto exports to the U.S. rising 8 percent by 2026, while U.S. assembly dips 3 percent amid cost pressures, potentially costing 45,000 American jobs in supplier networks.

The shifts have exacerbated tensions in Mr. Trump’s economic inner circle. Commerce Secretary Howard Lutnick, a tariff hawk, clashed with U.S. Trade Representative Robert Lighthizer during a Sunday call, per aides, with Mr. Lutnick pushing for retaliatory duties on Canadian parts to “claw back” investment. White House press secretary Karoline Leavitt framed the moves as “short-term pain for long-term gain,” touting the September deal’s $550 billion Japanese pledge — though only $120 billion has materialized, mostly in existing U.S. facilities. “The president’s tariffs are working — forcing fair play,” Ms. Leavitt said, but privately, aides expressed panic over midterm optics in auto states like Michigan and Ohio, where GM and Ford shares dipped 4 percent Monday on fears of lost supplier contracts to Canada.

Democrats pounced, linking the “flight” to Mr. Trump’s broader trade chaos. Senate Majority Leader Chuck Schumer, D-N.Y., scheduled a Tuesday hearing on “Tariff-Induced Job Flight,” subpoenaing Toyota and Honda executives. “Trump promised to save auto jobs — instead, he’s shipping them to Canada,” Mr. Schumer said in a floor speech, replaying Mr. Trump’s 2024 rally pledge: “No more cars from Japan — built here!” House Minority Leader Hakeem Jeffries, D-N.Y., introduced a bill to waive tariffs for U.S.-content vehicles, co-sponsored by Rep. Brian Fitzpatrick, R-Pa., warning: “This isn’t America First; it’s America Last in our own backyard.”

Industry voices amplified the alarm. The Alliance for Automotive Innovation, representing GM, Ford and foreign brands, issued a statement Monday decrying “unpredictable tariffs” that “distort supply chains,” with CEO John Bozzella noting Canada’s 1.6 million vehicle output in 2024 could hit 1.8 million by 2026, closing the gap with U.S. totals. Japanese executives, speaking anonymously, expressed regret: “We invested $124 billion in U.S. plants since 1982 — but tariffs make Canada’s stability irresistible,” one said.

For Mr. Trump, 79, the episode revives ghosts of his first-term trade wars, when steel tariffs juiced prices but bruised farmers. Aides floated a “tariff reset” speech Wednesday, teasing exemptions for “loyal” automakers, but the damage lingers. Polling from Emerson College showed his approval in auto-heavy states at 42 percent, with independents citing “economic uncertainty.” On X, #TrumpAutoFlee trended with 2.1 million mentions, from MAGA defenses blaming “globalists” to viral clips of empty U.S. lots contrasted with bustling Ontario factories.

As Cyber Monday buzzed with holiday deals on imported EVs, the auto exodus underscores Mr. Trump’s high-wire act: Tariffs as cudgel risk bludgeoning the very industries he aims to revive. Analysts like Mr. Fiorani warn Canada’s ascent isn’t hype — it’s math. In a continent of integrated chains, fleeing south isn’t betrayal; it’s survival. For Mr. Trump, erupting at CEOs won’t stem the tide — it may just accelerate it.