Nissan Motor has announced a suspension of US production for three of its vehicle models specifically designated for the Canadian market, according to a Reuters report.
This decision comes as a direct consequence of the escalating trade tensions between the United States and Canada, which have resulted in the imposition of mutual tariffs on imported automobiles.
The automaker stated that the tariffs have created an unsustainable economic environment for exporting these particular models from their US manufacturing facilities to Canada.
Nissan halts production
Nissan announced a halt in the production of its Pathfinder and Murano SUVs, as well as its Frontier pickup trucks, late on Wednesday.
The Japanese automaker did not specify when the suspension began or its expected duration.
Nissan said in a statement:
This is a short-term and temporary measure, and we remain hopeful that ongoing discussions between the US and Canadian governments will lead to a successful agreement in the near future.
Nikkei newspaper first reported the production halt, stating that the suspension began in May.
Nissan stated that 80% of its Canadian sales were attributed to vehicles sourced from either Mexico or Japan.
This includes its best-selling models in Canada: the Versa, Sentra, and Rogue.
Nissan assembles the Pathfinder and Murano in Tennessee and the Frontier in Mississippi.
Impact of Trump tariffs
The economic ripple effects of the Trump administration’s trade policies became increasingly evident in the automotive sector, with a significant move in April seeing the imposition of a 25% additional tariff on auto imports.
This aggressive tariff measure was not without consequence, as Canada, a key trading partner and neighbor, quickly responded by implementing its own set of retaliatory tariffs.
This tit-for-tat escalation in trade measures created a climate of uncertainty for automakers operating across North American borders.
One notable example of a company directly impacted by these tariffs was Mazda Motor Corporation.
In May, the Japanese automaker announced a strategic shift in its production plans.
Specifically, Mazda opted to halt its Canada-bound production at its Alabama plant.
This decision was a direct response to the new tariff landscape, which made exporting vehicles from the US to Canada less economically viable.
Concurrently, to optimise its operations within the revised trade framework, Mazda made the strategic choice to boost production specifically for the US market at the same Alabama facility.
This move allowed the company to circumvent the increased tariffs on vehicles destined for Canada while simultaneously strengthening its supply chain for the crucial US consumer base.
Financial challenges of Nissan
The tariffs highlight the challenges global automakers face, even in smaller markets like Canada for Nissan.
This situation exacerbates Nissan’s ongoing crisis, marked by declining sales and an outdated vehicle range.
The company recorded a $4.5 billion net loss in the financial year ending in March.
Nissan has also refused to provide a forecast for the current financial year, during which it faces approximately 700 billion yen ($4.79 billion) in debt maturities.
The automaker’s debt ratings have been downgraded to “junk” by all three major credit-rating firms.
This comes as the company reportedly asked some suppliers last month to delay payments, an indication of its urgent need to free up short-term funds and boost cash, according to a Reuters report from June.
In the last financial year, Canada represented only 3% of Nissan’s global sales.
The Japanese automaker does not operate factories in Canada, and its sales there amounted to approximately 104,000 vehicles.
This figure is less than half of its sales in Mexico and slightly over 10% of its sales in the United States.
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