Honda and Ford invest in Ontario plants despite U.S. tariffs

Analysis

Honda Canada announced an $867 million investment to retool its Alliston, Ont., plant for hybrid and gasoline vehicles on Monday, securing 4,000 jobs. The move comes as Ford Motor Co. has reopened its Oakville, Ont., assembly plant to build pickup trucks for the North American market. Both automakers are proceeding with these investments despite a 25 percent U.S. tariff on vehicles made in Canada, a policy championed by President Donald Trump. The decisions highlight a continued belief in the long-term viability of Canadian manufacturing and the integrated North American auto industry.

The federal government is providing $313 million and Ontario is contributing $156 million to Honda's total investment. An initial $166 million will fund plant upgrades, including the reintroduction of engine manufacturing. Honda Canada president and CEO Dave Jamieson said the investment reinforces Canada's role in the company's North American growth and hybrid strategy. Industry Minister Melanie Joly said the funding will strengthen automotive supply chains and support well-paying jobs.

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Ontario Premier Doug Ford called the Honda investment a clear vote of confidence in Ontario auto workers. He said the province is delivering on its plan to be more competitive in the face of tariffs and economic uncertainty. The investment follows Honda's decision in May to indefinitely pause a planned $15 billion electric vehicle complex in Alliston, citing dwindling demand and high development costs. That paused project had been slated to receive up to $5 billion in government support, but no money had been transferred.

Ford bets on profitable trucks

Meanwhile, Ford's Oakville plant has reopened after closing for retooling in 2024. It now produces large versions of the F-Series Super Duty pickup trucks, models like the F-250 and F-350. The plant turned out 3,488 trucks in October and has an annual capacity of 100,000 units. Most of the trucks are destined for U.S. buyers, supplementing production at Ford plants in Kentucky and Ohio that are running at full capacity. About 2,000 people are back on the job at the Oakville facility.

The F-Series is the best-selling vehicle in both the U.S. and Canada. Canadians bought more than 138,000 of the trucks in 2025, outselling the combined totals of its nearest competitors, the GMC Sierra and Chevrolet Silverado. Shahin Alizadeh, owner of Downtown Ford Toronto, said F-Series trucks now comprise 25 to 30 percent of his sales. He cited strong customer loyalty but expressed concern about the tariffs. I don't know if Ford is, if the tariffs keep going, Alizadeh said.

Ford says it has invested $5 billion at the Oakville plant, in addition to a $464 million federal grant. The plant was originally slated to be retooled for electric vehicles, but that plan was cancelled amid slowing U.S. demand for EVs. Fraser Johnson, a business professor at Western University, said Ford made the investment believing tariffs are not permanent and because the highly profitable trucks are in high demand. Given the margins on the product, Ford is able to some extent withstand the tariff costs, at least in the short term until there's some resolution of the trade dispute with the U.S., Johnson said.

Handling the tariff landscape

The 25 percent U.S. tariff on cars made in Canada is intended to foster American manufacturing, according to Trump. The policy is opposed by the North American auto industry as an unneeded expense that undermines decades of supply chain integration. Other automakers have responded differently. General Motors idled its electric van plant in Ingersoll, Ont., laying off more than 1,000 people. Stellantis is expected to announce the sale of its idled Brampton, Ont., plant to a defence contractor.

Brendan Sweeney, who represents Honda and Toyota as head of the Pacific Manufacturing Association of Canada, said strong consumer demand for Hondas ensures the Alliston plant keeps producing despite the tariffs. They're not in a position to stop production, Sweeney said. He added that the Japanese corporate belief in looking long-term, to a time when the tariffs might be gone, is also a big factor. The industry says the average U.S. content for cars made in Canada is about 50 percent, which makes for an effective tariff rate of about 12.5 percent.

Under a recent collective agreement with Unifor, Ford has agreed to bring back all laid-off Oakville workers by next July and includes a renewed no closure clause for all its Canadian facilities. Full-rate production workers will make $50.20 an hour by the end of the three-year deal. Alicia Boler Davis, president of Ford Pro, the company's work-truck division, said the Oakville plant will help the automaker catch up to demand from large commercial buyers and rental companies. We're excited about Oakville and that capacity because that's going to allow us to really grow, Boler Davis said on a recent conference call.

Honda's broader strategy includes launching 15 new Honda and Acura hybrid models globally by 2030, with North America as a key market. The company is also investing $3 billion in a new automotive manufacturing plant in Ohio, which will create more than 2,000 jobs. That facility, expected to open in 2029, is designed to produce hybrid-electric, gasoline-powered and battery-electric vehicles. Together, Honda's North American projects will raise its production capacity on the continent to roughly 1.9 million vehicles annually.

With files from The Canadian Press, CBC News and BNN Bloomberg