Nissan Halts Canada-Bound Production Amid U.S.–Canada Auto Tariff Dispute

TOKYO • Nissan Motor Co. (7201.T) has suspended production of three Canada-bound vehicle models at its U.S. manufacturing plants in Tennessee and Mississippi, as escalating tariffs between the United States and Canada disrupt North American automotive trade. The production freeze, which began in May, was first reported by Nikkei on Wednesday.

The suspension affects the Pathfinder and Murano SUVs manufactured in Tennessee, and the Frontier pickup truck produced at Nissan's Mississippi facility. The decision comes in response to the 25% tariffs on auto imports introduced by the Trump administration in April, prompting retaliatory levies from Canada.

Nissan is not alone in adjusting its North American operations. Mazda Motor Corp. (7261.T) has also halted Canadian-bound production at its Alabama plant, shifting focus to meet demand in the U.S. domestic market.

Tariff Shock Compounds Nissan’s Broader Struggles

Though Canada represents only about 3% of Nissan’s global vehicle sales, the production halt highlights the growing operational complexity facing multinational automakers in the current geopolitical and trade environment. The Canadian market, where Nissan sold approximately 104,000 units in the previous fiscal year, trails significantly behind its sales in Mexico and the United States.

The tariff-induced disruption comes at a precarious time for the Japanese automaker. Nissan posted a ¥660 billion ($4.5 billion) net loss for the fiscal year ended March 2025, amid weakening global sales and an ageing product portfolio. The company has declined to issue a profit forecast for the current financial year, during which it must also address approximately ¥700 billion ($4.8 billion) in maturing debt.

All three major credit rating agencies have downgraded Nissan to "junk" status, reflecting investor concerns over its liquidity position. Last month, Reuters reported that Nissan had approached some of its suppliers with requests to defer payments, underscoring the company's efforts to conserve cash and stabilize short-term finances.

Market Reaction and Outlook

Nissan’s shares fell 2.8% during afternoon trading on the Tokyo Stock Exchange, significantly underperforming the broader Nikkei 225 Index, which edged up 0.24%. The company does not operate any manufacturing facilities in Canada, relying entirely on exports to service the market.

As the U.S.–Canada tariff standoff continues, analysts warn that further disruptions to regional supply chains and trade flows could add pressure to a global auto industry already navigating economic uncertainty, tightening emissions regulations, and an accelerating shift toward electrification.

For Nissan, the twin challenges of external policy headwinds and internal financial strain leave little margin for missteps. Restoring competitiveness through product renewal and financial restructuring will be critical if the company is to regain stability in its key North American markets.