Subaru Shifts Canadian Production Away from the US as Trump's Tariffs Take a Significant Toll | Carscoops

      The automaker will now increase vehicle production for Canada in Japan instead of Indiana.

      Subaru is relocating its Canadian market production to Japan to evade expensive American tariffs. This decision comes as Subaru seeks to alleviate pressures stemming from new international tariffs.

      Numerous automakers are urgently exploring strategies to cope with the growing global tariff conflict.

      Trade wars have a peculiar way of backfiring on those who initiate them, and the current tariff dispute between the U.S. and Canada is already altering the automotive landscape. The effects are immediate, prompting Subaru to make significant logistical adjustments to keep expenses manageable.

      In 2024, Subaru sold 68,043 cars in Canada, with 26 percent, or 17,700 vehicles, coming from the USA. Due to Donald Trump’s latest tariffs, Canada has implemented a 25 percent tax on vehicles manufactured south of the border. Consequently, Subaru is relocating production of Canadian-bound models away from the U.S. to save costs, which will ultimately result in financial losses for America.

      By the start of the 2026 model year, Subaru plans to produce only 10 percent of its Canada-bound vehicles in the U.S. “This allows us to mitigate the effects of the counter surtax,” stated Tomohiro Kubota, CEO of Subaru Canada, during an interview with Autonews Canada. For the time being, production of the Outback for the Canadian market will continue in Lafayette, Indiana, but will transition to Japan shortly.

      Production Changes: What is Moving Where

      When this transition occurs, the Indiana plant will be restructured to manufacture the Forester, Subaru’s second-best-selling model in Canada after the Outback. It remains uncertain whether these Indiana-made Foresters will be shipped to Canada or if Subaru will rely on its existing Japanese factories, which currently produce the Forester for other international markets.

      Importantly, Subaru is among the few traditional automakers without production facilities in Canada. Until now, the company has depended on the USMCA agreement, which was renegotiated by Donald Trump during his first term. With that agreement now effectively weakened by new tariffs, Subaru is revising its strategy.

      Subaru is not the only company seeking innovative methods to circumvent tariffs. Canada, as a whole, is considering relaxing its regulations to permit more automakers to import vehicles from countries outside the USA. Volvo has laid off hundreds of workers in the U.S., and other manufacturers are halting imports to the country.

      The ultimate outcome of this situation remains uncertain. What is clear, however, is that the automotive industry will undergo significant changes, and not necessarily for the better.