A day after Donald Trump threatened to increase the auto tariff on Canada, the head of Canada’s largest private sector union blasted the idea, and industry leaders said the existing 25 per cent levy is already “a killer.”
鈥淭rump has made it clear that he wants to take our auto jobs and our plants 鈥 he can鈥檛 have them,鈥 Unifor national president Lana Payne said in a written statement Thursday. 鈥淐anada didn鈥檛 take U.S. jobs, and we鈥檙e not going to let him take ours. We鈥檝e been building cars in Canada for over a century and we鈥檙e not stopping now.鈥
Trump said Wednesday that at some point the automobile tariffs slapped on Canadian imports could increase while also indicating his administration is working on a deal with Canada.听
Donald Trump’s tariff war with Canada is escalating with new measures from the U.S. and
鈥淚 put tariffs on Canada, they are paying 25 per cent, but that could go up in terms of cars,鈥 Trump said in the Oval Office. 鈥淲hen we put tariffs on, all we are doing is we are saying, 鈥榃e don鈥檛 want your cars, in all due respect.鈥欌
Trump imposed a 25 per cent tariff on all imports of automobiles to the United States earlier this month.
It included a partial carveout for vehicles made under the Canada-U.S.-Mexico Agreement (CUSMA), where only non-American components of a finished vehicle will be hit with levies.
Tariffs on vehicle parts are set to hit no later than May 3.
The head of Canada’s Automotive Parts Manufacturers’ Association said that making the auto tariff even higher wouldn’t matter — the existing one would already have disastrous consequences for the entire North American automotive sector.
“Look, 25 per cent is a killer anyway, so you can go to 250 if you want. I think he also knows that,” said Flavio Volpe, APMA CEO. “The general public doesn’t know that 25 is a killer. So he wants to sound tough to everybody else, like he did with the escalation with China. At some point, the number doesn’t matter.”
Trump said he doesn鈥檛 want Canada to play a part in the U.S. automobile industry and claimed America鈥檚 northern neighbour was taking vehicle businesses.听
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.听
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.听
Canada has听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听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 鈥 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.
鈥淢ost auto suppliers are not capitalized for an abrupt tariff induced disruption. Many are already in distress and will face production stoppages, layoffs and bankruptcy,鈥 reads the open letter,听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.
鈥淚t only takes the failure of one supplier to lead to a shutdown of an automaker鈥檚 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.”听
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.”听
With files from Star wire services
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