The automobile industry has long been integrated between Canada and the U.S. with a deep history of co-operation. Vehicle parts cross the border multiple times before completion.
Unwinding that cross-border supply chain would hurt American workers, companies and consumers at least as much as it would hurt Canadians, said David Adams, president of Global Automakers of Canada, the association representing non-U.S. auto companies, including Honda and Toyota.
“I think that the more important question that the president needs to be considering is that Canada’s the largest market for American-built vehicles,” said Adams. “Maybe you want to be careful in terms of trying to shut the door on vehicles, our vehicles going into the U.S.”
Adams estimated that Canada imports roughly 700,000 to 720,000 American-built cars every year.
“That’s two or three assembly plants worth of production,” Adams estimated.
Canada has retaliated in kind, with a 25 per cent tariff on American-made cars imported to Canada, along with some carveouts for CUSMA-compliant vehicles. The five companies which assemble cars in Canada will also be allowed to import a certain number of U.S.-assembled vehicles free of the counter-tariffs.
The Center for Automotive Research in Michigan said earlier this month that tariffs will result in $107.7 billion (U.S.) in increased costs for all automakers with U.S. operations, including $41.9 billion to the Big Three — Ford, General Motors and Stellantis.
Earlier this week, a coalition of auto industry associations in the U.S. issued a grim warning to the U.S. administration that tariffs could crush the American automotive industry.
“Most auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,” reads the open letter, signed by the heads of six U.S. industry groups, including the National Automobile Dealers Association, and the American Automotive Policy Council, as well as MEMA, a suppliers association.
“It only takes the failure of one supplier to lead to a shutdown of an automaker’s production line. When this happens, as it did during the pandemic, all suppliers are impacted, and workers will lose their jobs,” the letter added.
The public blast is a change of tactic for the associations, which have previously preferred less confrontational tactics.
It’s a sign, said APMA’s Volpe, of the fear and potential for chaos in the industry, especially as the May 3 deadline for potential parts tariffs looms.
“Until this week, I’d yet to see anybody say on the record ‘by the way, we’re facing a pandemic-like shutdown threat.’ And now they’ve all said it all at once,” said Volpe. “And it wasn’t Canadians or Mexicans. It was all Americans.”
And, argued Volpe, Trump’s latest threat to increase tariffs could actually be more bluster before another climbdown.
It’s no coincidence, said Volpe, that Canadian and Mexican auto parts have already escaped tariffs on three separate occasions this year.
“American interests are Canadian interests are Mexican interests in auto parts.”
With files from Star wire services
