Tesla, Honda Plot U.S. Manufacturing Moves As Tariffs Begin To Bite
Two major automakers announced new U.S. manufacturing commitments this week as President Donald Trump’s nascent trade wars force firms to shuffle their supply chains in search of savings.
Tesla, led by billionaire Trump adviser Elon Musk, announced plans for a 1M SF battery factory outside Houston this week. The disclosure came less than 24 hours after Honda announced it was moving the planned production of its Civic hybrid from Mexico to Indiana in response to Trump’s tariffs.
Tesla’s new battery plant is slated to take over a space the electric vehicle manufacturer already leases near Katy, Texas. The property is currently being used as a logistics center by Tesla contractor DB Schenker, according to Electrek, which first reported the factory plans.
The factory proposal, revealed in a tax abatement agreement with Waller County, will also include an additional “600,000-square-foot distribution facility with some manufacturing capabilities,” according to the filing.
The factory will build production lines for Tesla’s Megapack, the large-scale energy storage solution marketed to utility companies and other infrastructure providers that leverage renewable energy.
Tesla already has a Megapack factory in California and recently opened another in Shanghai. The new factory will create roughly 1,500 jobs, according to Waller County.
Japanese automaker Honda is moving its hybrid Civic production to an existing factory in Greensburg, Indiana, as a direct response to Trump’s new tariffs, the company said. Production on the next-generation vehicles had been set to start in Mexico in November 2027, but the relocation will push the initial production rollout to May 2028.
The factory currently produces Honda’s CR-V models and it is expected to complete roughly 210,000 of the two car models annually once both production lines are running.
If U.S. production efforts aren’t enough to meet demand, the company will look to import vehicles from countries that haven’t been hit by tariffs, Honda said.
The president first signed an order adding a blanket 25% tariff on all goods coming from Mexico and Canada on Feb. 2. The move sent shockwaves across global markets and executive suites, and the administration backtracked the next day, suspending enforcement of the tariffs for a month.
With that deadline approaching, Trump told reporters Monday that there was “no room left for Mexico or for Canada,” and said the tariffs would take effect on March 4. Both countries have imposed retaliatory tariffs and pledged to continue the tit-for-tat escalation if new levies are imposed.
The announcement once again sent stocks plunging this week. While the order didn't include any mechanism for granting exceptions, the administration temporarily excluded U.S. automakers from the tariffs a day after they went into effect under intense lobbying from the industry. That carveout is set to expire in 30 days.
Trump referenced Honda’s move during an address to Congress this week before it was officially announced but after reports had leaked in the media, saying that the tariffs would eventually be a boon for U.S. automakers.
“Tariffs, it's a beautiful word isn’t it, that along with our other policies will allow our auto industry to absolutely boom,” he said. “It's going to boom.”
