• Honda has announced a significant change in its production strategy by deciding to manufacture the next-generation Civic hybrid in Indiana instead of Mexico. This decision is primarily driven by the potential imposition of 25% tariffs on goods imported from Mexico, as proposed by the U.S. government. The new production plan is set to begin in May 2028, with an expected annual output of around 210,000 units. This move marks a proactive response from Honda, as it aims to mitigate the financial impact of tariffs that could disrupt its supply chain and pricing strategy in the U.S. market.

• The shift in production location highlights broader industry trends where automakers are reevaluating their manufacturing strategies in light of changing trade policies. Honda's decision is particularly notable as it is the first major action taken by a Japanese automaker in response to the proposed tariffs. Historically, Mexico has been a cost-effective production hub for many automakers, including Honda, which exports a significant portion of its Mexican output to the U.S. This change could lead to increased production costs for Honda, but it also positions the company to better navigate potential retaliatory tariffs from Mexico and Canada.