by Subaru is relocating production for the Canadian market to Japan to avoid expensive American tariffs.
This step is being taken as Subaru works to reduce the pressure caused by new international tariffs.
Many car manufacturers are rushing to find ways to manage the escalating global tariff war.
Trade wars have a strange way of coming back to those who start them, and the latest one between the US and Canada is already redrawing the automotive map. The impact is immediate, and for Subaru, it is forcing serious logistical acrobatics just to keep costs under control.
In 2024, Subaru sold 68,043 cars in Canada, of which 26 percent or 17,700 cars came from the US. Thanks to a new round of tariff games by Donald Trump, Canada is now imposing a 25 percent tax on cars assembled south of the border. In response, Subaru is moving production of models destined for Canada outside the US to save money. This will result in millions of dollars in losses for America.
When production of the 2026 model for Subaru begins, only 10 percent of cars destined for Canada will be made in the US. “With this, we can minimize the impact of counter-sanctions,” said Tomohiro Kubota, CEO of Subaru Canada, who spoke with . For now, production of the Outback model for the Canadian market will continue in Lafayette, Indiana, but this will change in the near future to Japan.
When this happens, the Indiana plant will be retooled to start production of the Forester, the second most popular after the Outback in . What remains unclear is whether these Foresters assembled in Indiana will be exported to Canada, or if Subaru will instead use its existing plants that already produce Foresters for other global markets.
It is worth noting that Subaru is one of the few old car manufacturers without production facilities in Canada. Until now, it has relied on the USMCA agreement, which Donald Trump revised during his first term. Since this agreement is now effectively undermined by new tariffs, Subaru is changing its game strategy.
Subaru is not the only one trying to find creative ways around tariffs. Canada as a whole is considering allowing more automakers to import cars from countries outside the US. in the US, and other car manufacturers.
How this situation will end is still open for discussion. What is not in doubt is that in the end, the industry will look very different, and not necessarily better.
