As Canada braces for 25 per cent U.S. tariffs on steel and aluminum, U.S. President Donald Trump says he is considering an additional tariff on Canadian-made cars, which could be as high as 50 to 100 per cent.
In an interview with Fox News on Monday, Trump said Canada “stole” the automobile industry from the United States.
“If you look at Canada, Canada has a very big car industry. They stole it from us. They stole it because our people were asleep at the wheel,” Trump said.
The automobile manufacturing sector and its supply chain in Canada and the United States have been deeply integrated since the 1960s.
In 1965, former prime minister Lester B. Pearson and former U.S. president Lyndon B. Johnson signed the Canada–United States Automotive Products Agreement, commonly known as the Auto Pact.
The agreement removed tariffs on cars and car parts between the two countries
Industry voices are warning that a tariff on Canadian-made cars could lead to a shutdown of the entire North American auto industry.
“Last week, when we thought we were getting a 25 per cent tariff on everything, including cars and parts, I said that as soon as those tariffs come in, within a week, the industry would be shut down,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association.
Volpe said a tariff directed at the car industry would have the same impact.
“It’s going to cause the cessation of production by American car companies,” he told Global News.
Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association, said, “If you put in place tariffs, which are taxes of the scale that are being contemplated by the United States, it could lead to production stoppages, job losses and of course, price increases for Americans.”
Volpe said “hundreds of suppliers and dozens of automakers” have said in meetings that they would refuse to pay Trump’s surtax, which would bring the industry to a grinding halt.
“The North American auto manufacturing sector is so integrated that a car can cross the border up to eight times before it is fully assembled,”
“If you were to replace Canadian production, you would need five or six assembly plants to be built in the United States. That would cost about US$50 billion and it would take upwards of 10 years. That is not a realistic or feasible proposal,” he said.
Nguyen said it would cost “billions of dollars and a decade” for the U.S. to match Canada’s capacity to build some car parts facilities.
She added that Trump’s move would give European and Asian automakers an edge.
“An American consumer going to buy a new vehicle could see new vehicle prices increase by $6,500, if not more,” he said.
“The Canadian auto sector was built by Ford Motor Company starting in 1904. And General Motors traces its roots back to 1908 in Oshawa. And so we built this industry together, with the best of American intentions and to the benefit of Detroit,” he said.
Kingston said, “Canada is the largest export market for U.S. motor vehicles in the world. In fact, exports to Canada are larger than all exports to China, Germany and Mexico combined.”
Dave Mantin