Nissan Motor has paused production of three vehicle models intended for the Canadian market at its factories in Tennessee and Mississippi, according to a report by Nikkei.

The production halt began in May 2025 and affects the Pathfinder and Murano SUVs made in Tennessee, as well as the Frontier pickup trucks produced in Mississippi.

The suspension comes in response to new tariffs imposed by the US and Canada on auto exports.

In April 2025, the US introduced an additional 25% tariff on auto imports, prompting Canada to respond with retaliatory measures.

Nissan’s shares dropped 3% in Tokyo, trailing the Nikkei index’s 0.14% decline.

.source-ref{font-size:0.85em;color:#666;display:block;margin-top:1em;}a.ask-tia-citation-link:hover{color:#11628d !important;background:#e9f6f5 !important;border-color:#11628d !important;text-decoration:none !important;}@media only screen and (min-width:768px){a.ask-tia-citation-link{font-size:11px !important;}}

🔗 Source: Reuters

🧠 Food for thought

1️⃣ North American auto manufacturing’s deep integration magnifies tariff impacts

Nissan’s production halt highlights how deeply intertwined the North American auto industry has become through decades of cross-border integration.

Approximately 80% of vehicles produced in Canada are exported to the US, creating significant vulnerability to tariff policies for the entire Canadian auto sector 1.

The 25% tariff adds approximately $2,700-3,000 per vehicle, making production economically unfeasible and forcing difficult adjustments across the industry 2.

Before these disruptions, North American integration was highly advanced, with 16.9 million light vehicles produced across the region in 2018, and parts and components regularly crossing borders multiple times during production 3.

This level of integration was cultivated through agreements like NAFTA and later USMCA, which shaped manufacturing footprints based on efficiency rather than tariff avoidance—a strategy now facing challenges.

2️⃣ Automakers deploy divergent strategies based on manufacturing footprints

Nissan’s response to tariffs reveals how companies must craft unique responses based on their specific manufacturing and import structures.

For Nissan specifically, the impact is softened by the fact that 80% of its vehicles sold in Canada already come from outside the US, primarily Japan and Mexico, making their Canadian business less dependent on US production 4.

The company has also maintained a strategic 90-day inventory buffer of the affected models in Canadian dealerships, providing temporary insulation from immediate supply disruptions 4.

Other manufacturers are taking different approaches: Honda is moving production of its Civic hybrid to US plants to comply with tariff requirements, while Mazda has also halted Canada-bound production at its Alabama facility 5.

These varied responses demonstrate how the same tariff policy creates vastly different challenges depending on each manufacturer’s existing production network and supply chain configuration.

3️⃣ A potential reversal of decades-long manufacturing integration

The current tariff situation threatens to unwind decades of carefully constructed regional auto manufacturing integration that began with NAFTA in the 1990s.

The transition from NAFTA to USMCA had already increased regional content requirements from 62.5% to 75%, forcing manufacturers to adapt their supply chains and sourcing strategies 6.

Production decisions that once prioritized efficiency and specialization are now being reconsidered through the lens of tariff avoidance, with automakers across North America revisiting manufacturing footprints 7.

This shift is particularly concerning for an industry that relies on scale and efficiency, as fragmentation of production could increase costs across the board. The University of British Columbia has predicted a potential 30-40% decline in the Canadian auto industry if North American trade relations deteriorate further 1.

These disruptions come at a challenging time for manufacturers like Nissan, which had already announced a 17% reduction in US production and workforce reductions as part of broader efforts to address declining global sales and profitability 8.

Recent Nissan developments

……