Trump’s 25% tariffs pose existential threat to Canadian auto industry | Real Time Headlines

DETROIT — Concerns are growing about President-elect Donald Trumpplans to impose 25% tariff Restrictions on Canadian imports would pose an existential threat to the country’s resurgent auto industry.

Potential tariffs on cars and auto parts are particularly worrisome for Ontario, the heart of Canada’s auto industry. Five automakers— Ford Motor Company, General Motors, star, Toyota Motor and honda cars – The province produced 1.54 million light vehicles last year, primarily targeting U.S. consumers.

“This is going to be horrific. It’s not just going to destroy jobs in Canada, it’s going to destroy jobs in the United States,” Ontario Premier Doug Ford said in a phone interview with CNBC.

A tariff is a tax levied on imported or foreign goods entering the United States.

Ford said he has not spoken directly to Trump and believes any tariffs would be harmful to both sides of the border.

Raw materials and parts often cross borders multiple times before being used in final assembly of vehicles, he said. He warned that tariffs would raise prices, slow production and eliminate jobs.

“We now have a trade deal. Things are going well,” Ford said. “I have said it publicly: I would love to have a bilateral trade deal with the United States, Mexico wants a trade deal, we will have a bilateral trade deal with Mexico. But Mexico, if they want a seat at the table, they have to play by the rules. .

Trump says he will impose 10% tariff on goods from China Canada and Mexico impose 25% taxalthough he did not provide some details, such as whether there would be exceptions. He said he planned to pass the tax increase on “national security” grounds rather than seeking congressional approval, saying illegal immigration and the illegal drug trade were causing border concerns to justify the tariffs.

A Wells Fargo analyst report estimated that tariffs on parts from Mexico, Canada and China could increase tariffs by $600 to $2,500 per vehicle. Prices for cars assembled in Mexico and Canada, which account for about 23% of U.S. auto sales, could rise by $1,750 to $10,000.

Such tariffs and increased costs will create more problems for embattled Canadian Prime Minister Justin Trudeau as he resisting calls for his resignation.

Ontario recently launched a multi-million dollar advertising campaign in the United States to promote itself as a major trading partner and “Alliance with the North.”

Ford said Ontario, as a province, is the third-largest trading partner of the United States, including the largest foreign trade partner with 17 states. He noted that trade between Ontario, and Canada more broadly, is much more evenly distributed with the U.S. than with Mexico, especially after removing the oil Canada sends to the U.S.

In 2023, Canada’s auto parts exports will be worth CAD 23.5 billion, and total light vehicle exports will be CAD 53.5 billion. According to Canadian data, imports totaled $47.5 billion and $70.4 billion respectively. Desrosier Automotive Consultants. Among them, the United States accounts for 95.3% of Canada’s total automobile exports and 57.7% of Canada’s total automobile imports..

“Anything that upsets that balance will affect both sides of the border,” said Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association. “The optimal tariff level for Canadian and U.S. auto parts suppliers is zero.”

Volpe believes that double-digit tariffs will be “a matter of life and death” and will have a ripple effect on the U.S. auto industry. He cited as an example that in 2022, Canadian truck drivers blocked the Ambassador Bridge between Detroit, Canada, and Windsor, Ontario – the busiest border bridge between the two countries. disrupt manufacturing For many U.S. automakers

Toyota is Canada’s most productive automaker, producing about 526,000 vehicles in 2023, followed by Honda with nearly 378,500 vehicles. GM, once Canada’s largest producer with annual output of more than 1 million vehicles, is now one of the region’s smallest light vehicle manufacturers.

“The industry, like the U.S. industry, faces challenges in recovering from the pandemic. From a sales and production perspective, we are not there yet, but we have been recovering,” said company president David Adams (David Adams) said. Canadian global automakerrepresenting the interests of 16 non-U.S. automakers.

Sales are rising even though Ford and Stellantis have two large assembly plants in Ontario because the plants currently have no vehicles to produce. Thousands of workers were laid off due to lack of production.

Much of the uncertainty is caused by the automotive industry’s transition to all-electric vehicles, as Adoption of electric vehicles It didn’t happen as quickly as expected. Trump has also vowed to eliminate subsidies for buying electric vehicles, which has helped spur sales while federal benefits remain in place.

“There are deep concerns about Canada’s auto industry because it’s not clear which direction to go,” said Charlotte Yates, chair of the Center for Automotive Policy Research and professor emeritus at McMaster University. “A series of public policy changes, changes in political attitudes and, of course, the threat of tariffs are really unsettling for Canadian industry.”

Ontario Premier Doug Ford said the United States and Canada should work together, as they have for decades.

“We should be focusing on China and Mexico, not their closest allies around the world,” Ford said. “Let’s build a fortress, a U.S.-Canada bulwark against the rest of the world. If we stand together, we can’t blocked.”