Canadians let out a temporary sigh of relief Monday afternoon after an 11th hour deal between U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau temporarily halted the imposition of a hefty 25 per cent tariff on most Canadian exports to the U.S.
Now it remains to be seen what will happen when that new tariff deadline arrives in 30 days.
Trump signed the order with the promise to follow through with the punitive economic measure starting Tuesday Feb. 4.
On the eve of the imposition of the tariffs, Canada’s auto industry groups issued statements and presented a united front as they readied for a prolonged battle with Canada’s largest trading partner.
Tim Reuss, President & CEO of the Canadian Automobile Dealers Association (CADA), said the U.S. tariffs would have an immediate negative effect on consumers on both sides of the border as the prices of vehicles and parts used for servicing them will be impacted.
“Vehicle and parts production and distribution across North America is highly integrated and the result of decades-long efforts and cooperation by the U.S./Canada/Mexico governments and manufacturers,” said Reuss. “Automotive dealers and the over 178,000 people they employ depend on functioning supply chains in order to sell and properly maintain the vital automotive infrastructure of Canada. All efforts should be undertaken to remove these job-killing tariffs. CADA will advocate on both sides of the border to remove these tariffs and protect dealers and our consumers.”
CADA held a webinar Monday afternoon for its dealer members, where they briefed them about the latest updates in what was described as a fluid situation.
Brian Kingston, President of the Canadian Vehicle Manufacturers Association, said the tariffs would have negative consequences for the highly-integrated North American automotive supply chain.
“Tariffs on vehicles and parts will reduce North American vehicle production, increase vehicle prices and lead to job losses at manufacturing facilities across the continent,” said Kingston.
David Adams, President and CEO of the Global Automakers of Canada, said the association’s members are “gravely concerned” about the tariffs.
“This will have immediate negative impacts on jobs and consumers on both sides of the border,” said Adams. “Tariffs only serve to increase costs, hinder trade, impact economic growth and hurt consumers and workers. The United States and Canada aren’t just each other’s largest trading partners, but we actually build things together, not for each other. There is no other industry where this is the case more the automotive industry, where we have had sectoral free trade between the two countries since 1965. The situation needs to be resolved with tariffs removed as quickly as possible if we are to avoid permanent and significant damage to the North American automotive sector.”
Speaking to CTV News, Flavio Volpe, President of the Automobile Parts Manufacturers’ Association, said a 25 per cent tariff is going to shut down the auto sector in Canada, the U.S., and Mexico within the week, but not without a public voice of concern from manufacturers. He predicted the heads of American automotive manufacturers will go to Washington or court for emergency relief from what he called a “trumped up” argument by the U.S. President supporting the need for tariffs. He said Trump is using an international economic emergency based on a non-existent fentanyl crisis.
“Those are publicly-traded companies in the U.S., their shareholders are going to watch the Dow tank,” said Volpe. “Their institutional shareholders, which include big money managers, big equity groups, big pension funds, are going to demand the boards of those companies either instruct their executives to go to court or find new executives in one week. “It won’t be just the Canadians hoping that somebody hears, this is a direct hit on the U.S. auto sector and that starts on Tuesday,” said Volpe in the interview.
He said the APMA went to court last year for relief when the Ambassador Bridge closed last year for five days. He said the APMA argued the lost days cost companies on both sides of the border $1 billion. He said the judge provided 10 days of relief.
Volpe serves on the council to advise Canadian Prime Minister Justin Trudeau and his cabinet how to navigate through the tariff threat. Following Trump signing the executive order, Trudeau announced on Saturday night Canada will retaliate with tariffs amounting to $155 billion on American goods.
“We need to figure out in the very short term how these countermeasures affect Canadians, and specific Canadian industries,” said Volpe. “We’ve been counseling the Prime Minister and cabinet for a couple of weeks now so that you don’t have to do exactly what (Trump) does in some sectors like the one I represent. Save some of that gun powder for the sectors that really need it.”
Canadian auto dealer will continue to monitor this story and provide updates as the situation evolves.
