Tariff Threat Looms Over Canada’s Recovering Auto Industry
The Canadian automotive industry is bracing for impact as President-elect Donald Trump’s plan to impose 25% tariffs on Canadian imports threatens to disrupt the delicate balance of trade between the two nations.
A Threat to Jobs and Production
Ontario Premier Doug Ford warns that tariffs would not only devastate Canadian jobs but also have a ripple effect on American jobs. The province, which is home to five major automakers, produced 1.54 million light-duty vehicles last year, primarily for U.S. consumers. Ford argues that tariffs would increase prices, slow production, and eliminate jobs, citing the complex supply chain that relies on raw materials and parts crossing the border multiple times.
The Cost of Tariffs
Estimates suggest that tariffs on components could add $600 to $2,500 per vehicle, while prices on vehicles assembled in Mexico and Canada could rise by $1,750 to $10,000. This would add to the woes of Canadian Prime Minister Justin Trudeau, who is already facing calls for his resignation.
Ontario’s Key Role in U.S. Trade
Ontario is the third-largest trading partner for the U.S., with trade between the province and the U.S. being much more evenly split than with Mexico. Canadian exports of auto parts totaled $23.5 billion in 2023, while exports of light vehicles reached $53.5 billion. The U.S. accounts for 95.3% of Canada’s total auto exports and 57.7% of its overall auto imports.
Industry Experts Weigh In
Flavio Volpe, head of the Canadian Automotive Parts Manufacturers’ Association, argues that a double-digit tariff would be “existential” for the industry, with ripple effects into the U.S. automotive industry. David Adams, president of the Global Automakers of Canada, notes that the industry is still recovering from the pandemic and that tariffs would only add to the uncertainty.
A Call for Cooperation
Ontario Premier Doug Ford urges the U.S. and Canada to work together, as they have for decades, rather than imposing tariffs. “Let’s build a fortress, an American–Canadian fortress against the rest of the world,” he says. “We can’t be stopped if we stick together.”
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