Canadian and American flags fly near the base of the Ambassador Bridge connecting Canada to the U.S. in Windsor, Ontario, Canada, on Wednesday, May 26, 2021.
The potential for President-elect Donald Trump’s plan to impose 25% tariffs on Canadian imports has left the Canadian auto industry in a state of concern. The plan, which would affect vehicles and automotive parts, could be devastating for the province of Ontario, which is the epicenter of Canada’s auto industry. Five automakers – Ford, General Motors, Stellantis, Toyota, and Honda – produced 1.54 million light-duty vehicles in Ontario last year, largely for U.S. consumers.
Ontario Premier Doug Ford, who has not spoken with Trump directly, believes that the tariffs would not only destroy Canadian jobs but also American jobs. He believes that any tariffs would increase prices, leading to a slowdown in production and job losses. Raw materials and parts often pass across the border multiple times before being used in the final assembly of a vehicle, and tariffs would add to the cost, potentially slowing production and eliminating jobs.
Ford also called for a bilateral trade deal with the U.S., saying that Mexico would need to follow trade rules to join the table. He believes that any tariffs would be harmful to both sides of the border and that the two countries should be working together to address global issues.
Industry experts agree that tariffs would have disastrous consequences for both Canadian and American auto parts suppliers. Flavio Volpe, head of the Canadian Automotive Parts Manufacturers’ Association, believes that a double-digit tariff would be “existential” and would have ripple effects in the U.S. automotive industry.
The Canadian automotive industry is recovering from a decades-long decline, with light-duty vehicle production in Canada reaching 1.54 million vehicles last year, up from a recent low of 1.1 million in 2021. However, this increase is still a 47% decline from the country’s peak of 2.9 million in 2000. The industry is still recovering from the pandemic and is facing uncertainty due to the transition to all-electric vehicles and the threat of tariffs.
