The decision by U.S. President Donald Trump to slap a 25 per cent tariff on Canadian goods will effectively create a trade war that will have an immediate and devastating impact on the automotive sector. That’s the sentiment expressed by some auto group associations on the day the tariffs were imposed on Canada.
As we were going to press, there was some discussion that the Trump administration might find a “middle ground” with Canada, but no details have yet emerged.
Prime Minister Justin Trudeau responded to the imposition of the tariffs at a press conference Tuesday with some strong words. He took direct aim at President Trump, saying: “Even though you are a smart guy this is a very dumb move,” said Trudeau, echoing the sentiment expressed by the Wall Street Journal’s editorial board.
Trudeau said his government would use every tool at their disposal so that Canadian workers and businesses can weather the storm. “We will relentlessly fight to protect our economy. We will fight to stand up for Canadians for every single second of every second day.”
He said Canada is already actively working to break down interprovincial trade barriers, boost trade with other countries like Mexico, and will keep a close watch on any predatory behaviour by U.S. firms trying to take over any Canadian firms weakened by the economic disruption. “When it comes to defending our great nation there is no price we won’t be willing to pay,” said Trudeau.
While he said the government would soon unveil details of support programs for individuals and businesses, its priority is removing the tariffs. “Our focus has to be on getting these tariffs lifted as quickly as possible,” said Trudeau.
In a startling statement from a Canadian Prime Minister, Trudeau asserted that Trump was trying to weaken the Canadian economy, and the country, to make it easier to annex and make it the 51st state, as Trump has repeatedly asserted since taking office.
In a statement, the Canadian Automobile Dealers Association said: “Today the President of the United States imposed 25 per cent tariffs on all Canadian exports to the U.S. and 10 per cent on energy exports. These tariffs threaten the North American economy and the North American automotive supply chains. CADA is actively working to try to stop the damage of tariffs. We are engaged in Ottawa and Washington with trade and economic officials. CADA is also working on a daily basis with auto manufacturers and dealer representatives in the U.S..”
The statement said that CADA and the federal government were consulting with the auto sector on another proposed $125 billion tariffs, and that the provincial dealer associations and CADA continue to work closely with provincial governments on the issue.
The association also held a members-only webinar yesterday afternoon to brief members directly about the issue.
David Adams, President/CEO of Global Automakers of Canada, said tariffs are taxes that hurt consumers with increased costs, drive inflation, and unfairly impact workers on both sides of the border.
“We need a long-term solution that removes these unjustified tariffs and ensures stability and competitiveness for all North American businesses,” said Adams.
Brian Kingston, President of the Canadian Vehicle Manufacturers Association, said the U.S. tariffs will do significant damage to the highly-integrated North American automotive industry.
“This will undo over 60 years of integration that has fostered a globally competitive automotive industrial base,” said Kingston. “Given the importance of the automotive industry to the U.S., Canada, and Mexico, the tariffs will have negative economic consequences. We are calling for an immediate lifting of the tariffs.”
According to the CVMA, more than half of the parts and components in Canadian-built vehicles originate in the U.S. Canada builds nine percent of the vehicles Americans purchase annually. U.S.-manufactured vehicles are responsible for more than 40 per cent of Canadian purchases.
Ontario Premier Doug Ford said on Tuesday in a media conference in Toronto he is “positive” the automotive assembly lines on both sides of the border will shut down in seven to 10 days because of the supply chain parts that go back and forth between Canada and the U.S. up to eight times.
Ford also referenced the Canada-U.S. Auto Pact, which began in 1965 and was cancelled in 2001.
“The auto pact has been around since 1960 and as I’ve said (about it), you can’t unscramble an egg, you have to make the omelette larger,” Ford said.
