{"id":58143,"date":"2025-04-01T16:06:40","date_gmt":"2025-04-01T16:06:40","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2025\/04\/01\/canadas-auto-sector-considers-going-it-alone-amidst-tariffs\/"},"modified":"2025-04-01T16:06:40","modified_gmt":"2025-04-01T16:06:40","slug":"canadas-auto-sector-considers-going-it-alone-amidst-tariffs","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2025\/04\/01\/canadas-auto-sector-considers-going-it-alone-amidst-tariffs\/","title":{"rendered":"Canada&#8217;s auto sector considers going it alone amidst tariffs"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header article-header--story\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\" data-aqa=\"nav-breadcrumb\">\n<p>Breadcrumb Trail Links<\/p>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\">Electric Vehicles<\/li>\n<li class=\"breadcrumbs__item\">Economy<\/li>\n<li class=\"breadcrumbs__item\">Transportation<\/li>\n<li class=\"breadcrumbs__item\">Autos<\/li>\n<\/ol>\n<\/nav>\n<div class=\"article-header__detail\">\n<div class=\"article-header__detail__texts\">\n<p class=\"article-subtitle\">Vehicles rank as Canada&#8217;s second-largest export, valued at $51 billion, so a collapse could ripple through the economy<\/p>\n<div class=\"callout callout--noindent flex-align-center flex-justify-between\" data-evt-val=\"{\" control_fields=\"\" data-evt=\"visible\" data-evt-typ=\"element_view\"><span class=\"callout__text\"> Get the latest from Gabriel Friedman straight to your inbox <\/span><button class=\"button button--icon button--primary-alt\" data-id-login-redirect=\"https:\/\/financialpost.com\/author\/gfriedmanpostmedia\/newsletters\/\" type=\"button\"><span class=\"button__text\">Sign Up<\/span> <span aria-hidden=\"true\" class=\"button__icon\"> <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewbox=\"0 0 11 11\" width=\"11\"><polygon points=\"1.1 0 7 6 1.1 12 0 10.9 4.8 6 0 1.1\"\/><\/svg> <\/span><\/button><\/div>\n<div class=\"article-meta\">\n<p><span class=\"published-date__since\">Published Apr 01, 2025<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">Last updated 13\u00a0hours ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">9 minute read<\/span><\/p>\n<div class=\"article-meta__bottom\">\n<div class=\"bookmark-wrapper\">\n<div class=\"popover\" data-aqa=\"popover\" data-click-to-appear=\"True\" data-container=\"\" data-container-offset=\"\" data-no-style=\"\" data-popover-component=\"\" data-position=\"top\" data-sticky=\"\" data-tail-offset=\"200\" data-tail-position=\"right\"><button class=\"popover__trigger bookmark-button\"><span class=\"save-article-button save-article-button--default\" title=\"Save article\" data-article-id=\"4d556b95-d292-47ec-ae62-947dd277f39b\" data-evt-skip-click=\"true\"\/><\/button><\/p>\n<div aria-describedby=\"popover-desc-popover-bookmark\" class=\"popover__content\" hidden=\"\" role=\"dialog\">\n<div class=\"popover__content__wrapper\">\n<div class=\"popover__content__text\" id=\"popover-desc-popover-bookmark\">\n<div class=\"bookmark__popover__content\">\n<p>You can save this article by registering for free here. Or sign-in if you have an account.<\/p>\n<\/div>\n<\/div>\n<p><button class=\"popover__content__close\" data-evt-skip-click=\"true\" title=\"Close\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" xmlns:xlink=\"http:\/\/www.w3.org\/1999\/xlink\" viewbox=\"0 0 12 12\" class=\"icon--close\" height=\"12\" version=\"1.1\" width=\"12\"><polygon points=\"12 0.95 11.05 0 6 5.05 0.95 0 0 0.95 5.05 6 0 11.05 0.95 12 6 6.95 11.05 12 12 11.05 6.95 6\"\/><\/svg><\/button><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<figure class=\"featured-image\" data-aqa=\"featured-image\"><picture class=\"featured-image__ratio\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=webp&amp;sig=S46iCR7_1m7pDcbs5czGbA,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=webp&amp;sig=qdT85q3HG8scOM9XZyDQIw 2x\" type=\"image\/webp\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=564&amp;h=423&amp;type=jpg&amp;sig=JkkJ38v9Im4wDZR7d4PNMg,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=1128&amp;h=846&amp;type=jpg&amp;sig=kfTWi-2AXDa-U2LkgQUl9A 2x\" type=\"image\/jpeg\"><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=webp&amp;sig=gVvltrhi4DtzZJKpV7Jt4w,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=webp&amp;sig=mEYEgArufU0ieMS_8iqWwQ 2x\" type=\"image\/webp\"><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=472&amp;h=354&amp;type=jpg&amp;sig=JlXfloKOm3potE80YpA83A,&#10;                https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=944&amp;h=708&amp;type=jpg&amp;sig=ryMOODxEQ7IzXO2uwPPB4Q 2x\" type=\"image\/jpeg\"><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=288&amp;h=216&amp;type=webp&amp;sig=q6i2_Urr3g0OCOwMjeU-rQ,&#10;            https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-mg-cars.jpg?quality=90&amp;strip=all&amp;w=576&amp;h=432&amp;type=webp&amp;sig=WugnfIipOIBVZ4CLGkkW9w 2x\" type=\"image\/webp\"><\/source><\/source><\/source><\/source><\/source><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">If tariffs do bring Canada&#8217;s auto production to a halt, it would amount to $330 million in losses and two per cent in production volume for each week of closure, with losses growing over time.<\/span> <span class=\"credit\">Photo by Hand-out\/Postmedia files<\/span><\/figcaption><\/figure>\n<\/div>\n<\/header>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p data-async=\"\">United States President Donald Trump and Mark Carney agree on at least one thing: both think their country\u2019s auto sector can survive American tariffs. But the Liberal Leader said Canada\u2019s auto sector would need to be reimagined to achieve that.<\/p>\n<\/section>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<\/section>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p data-async=\"\">\u201cWe can sustain an auto industry with the U.S. having tariffs with access to other markets,\u201d he said during a March 27 press conference. \u201cProvided we engage very deliberately in partnership \u2014 government, business, labour \u2014 to reimagine the auto sector.\u201d<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_2\">\n<section aria-describedby=\"advertisment5241789507924081572278121434972160\" class=\"ad\">\n<p>Advertisement 2<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__inner__container\" 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your city and across Canada.<\/p>\n<ul class=\"list-unstyled list-checkmark\">\n<li>Exclusive articles from Barbara Shecter, Joe O&#8217;Connor, Gabriel Friedman and others.<\/li>\n<li>Daily content from Financial Times, the world&#8217;s leading global business publication.<\/li>\n<li>Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.<\/li>\n<li>National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.<\/li>\n<li>Daily puzzles, including the New York Times Crossword.<\/li>\n<\/ul>\n<\/div>\n<div class=\"intro-body__anonymous\">\n<p>REGISTER \/ SIGN IN TO UNLOCK MORE ARTICLES<\/p>\n<p class=\"identity-intro__description\">Create an account or sign in to continue with your reading experience.<\/p>\n<ul class=\"list-unstyled list-checkmark\">\n<li>Access articles from across Canada with one account.<\/li>\n<li>Share your thoughts and join the conversation in the comments.<\/li>\n<li>Enjoy additional articles per month.<\/li>\n<li>Get email updates from your favourite authors.<\/li>\n<\/ul>\n<\/div>\n<div class=\"intro-body__registration_only hidden\">\n<p>THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.<\/p>\n<p class=\"identity-intro__description\">Create an account or sign in to continue with your reading experience.<\/p>\n<ul class=\"list-unstyled list-checkmark\">\n<li>Access articles from across Canada with one account<\/li>\n<li>Share your thoughts and join the conversation in the comments<\/li>\n<li>Enjoy additional articles per month<\/li>\n<li>Get email updates from your favourite authors<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/header>\n<div class=\"identity-screen m-x-0 p-x-0 col-xs-12 col-md-6 flex-justify-center flex-align-center\" aria-live=\"assertive\">\n<section class=\"sail\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-sailthru-personalization-engine=\"\" data-sailthru-personalization-engine-component=\"\"\/>\n<div class=\"m-x-0 p-x-0 col-xs-12 col-sm-6 col-md-12 flex-align-justify-center\" data-auth-component=\"\" id=\"auth-screen-form\">\n<div class=\"identity-screen-form--active w-full flex-align-justify-center\">\n<div class=\"identity-screen-form identity-screen__content w-full\">\n<h2 class=\"blocker-title\">Sign In or Create an Account<\/h2>\n<p><span class=\"identity-divider__line\"\/><span class=\"identity-divider__text\">or<\/span><span class=\"identity-divider__line\"\/><\/p>\n<\/div>\n<\/div>\n<\/div>\n<footer class=\"identity-footer identity-screen__content m-x-0 p-x-0 col-sm-6 col-md-12\"\/><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>It\u2019s an idea that\u2019s gaining traction in policy circles as the U.S. seeks to undo the decades-long integration of the two countries\u2019 auto sectors that was cemented by the 1965 auto pact.<\/p>\n<p>The pact was not a free-trade agreement, but it created a duty-remission scheme that allowed U.S. automakers to offset tariffs in Canada by increasing the Canadian content in their vehicles. It came about because policymakers viewed Canada\u2019s auto sector as too small to survive on its own, with domestic manufacturers unable to achieve the economies of scale necessary to be competitive.<\/p>\n<p>Designed to ensure Canada\u2019s auto sector survived, the pact led to a tight integration with the U.S. so that parts and vehicles could cross the border multiple times before being finished for the consumer market.<\/p>\n<p data-async=\"\">But Trump\u2019s proposed tariffs threaten to upend the industry\u2019s six-decade-old model. Around 85 per cent of the vehicles manufactured in Canada are exported to the U.S. and they would likely no longer be competitively priced if the tariffs are implemented.<\/p>\n<p>Scheduled to take effect on Wednesday and start being collected on Thursday, the tariffs would apply a flat 25 per cent tax on all finished vehicles not manufactured in the U.S. But in a twist that would essentially reverse the two countries\u2019 integrated auto sectors, the tariffs on the finished car would be reduced based on the value of any auto parts that were made in the U.S. There could be additional 25 per cent tariffs on auto parts made in Canada at an unspecified date.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_3\">\n<section aria-describedby=\"advertisment1439691393979396475623950671413248\" class=\"ad\">\n<p>Advertisement 3<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-3\">\n<div class=\"ad__inner__container\" data-ad=\"[[7,7],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"7x7\" data-ad-loc=\"3\" data-ad-mobile=\"[[7,7],[300,250],[320,50],[300,50]]\" data-aqa=\"advertisement\" id=\"ad-3\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>That\u2019s led some analysts to question whether there have been enough changes in technology, trade and the economy in the six decades since the auto pact was signed that Canada\u2019s auto sector could survive on its own.<\/p>\n<p>Their premise is that Canada has the capacity to make as many vehicles as its consumers purchase each year, which is around two million vehicles.<\/p>\n<p>\u201cThere\u2019s certainly a strong economic argument to be made that we actually don\u2019t have net exports in vehicles to the U.S.,\u201d Bentley Allan, a professor of political science at Johns Hopkins University and a principal at the Ottawa-based Transition Accelerator think tank, said. \u201cIt\u2019s pretty much an even trade, so let\u2019s just bring all those exports of auto parts and autos back over on this side of the border.\u201d<\/p>\n<p>The idea is that existing auto manufacturers in Canada would continue producing the models already being built or planned to be built here, which includes sedans, SUVs, sports cars, minivans and pickup trucks such as the Honda Civic and Toyota RAV4.<\/p>\n<p>If Canada could produce a half-dozen models that account for the majority of vehicles purchased here, and imports from other countries account for the remainder, then it could work, Allan said.<\/p>\n<\/section>\n<div class=\"js-widget-content article-content__widget-group article-content__widget-group--content-slot29 article-content__widget-group--newsletter-slot\">\n<section class=\"newsletter-widget__new-story-page fp-headlinenews background--primary-light-gradient\" aria-labelledby=\"FinancialPostTopStories1158778920427835352646680190124032\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-aqa=\"widget-newsletter\" data-newsletter=\"single\" data-newsletter-component=\"\" data-target-list=\"FP_HeadlineNews\" data-widget=\"newsletter\">\n<div class=\"newsletter-new-story-page-template\">\n<div class=\"newsletter-widget__header__new-story-page\">\n<div class=\"newsletter-widget__banner__new-story-page\"><img decoding=\"async\" alt=\"Top Stories\" loading=\"lazy\" src=\"https:\/\/dcs-static.gprod.postmedia.digital\/18.3.3\/websites\/images\/newsletters\/icon-fp-topStories.svg\"\/><\/div>\n<div>\n<p>Top Stories<\/p>\n<p class=\"newsletter-widget__text__new-story-page\">Get the latest headlines, breaking news and columns.<\/p>\n<\/div>\n<\/div>\n<div class=\"newsletter-widget__body__new-story-page\">\n<div class=\"js-replace-main__new-story-page\">\n<p class=\"newsletter-widget__disclaimer__new-story-page text-size--tiny\">By signing up you consent to receive the above newsletter from Postmedia Network Inc.<\/p>\n<\/div>\n<div class=\"js-submit-success\" hidden=\"\" id=\"submitSuccessFP_HeadlineNews\">\n<p>Thanks for signing up!<\/p>\n<p class=\"newsletter-widget__text__new-story-page\">A welcome email is on its way. If you don&#8217;t see it, please check your junk folder.<\/p>\n<p class=\"newsletter-widget__text__new-story-page newsletter__feedback--last\">The next issue of Top Stories will soon be in your inbox.<\/p>\n<\/div>\n<p class=\"newsletter-widget__text__new-story-page js-submit-error\" style=\"margin-top: 8px\" hidden=\"\" id=\"submitErrorFP_HeadlineNews\">We encountered an issue signing you up. Please try again<\/p>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_4\">\n<section aria-describedby=\"advertisment3803811529701079828865583566290944\" class=\"ad\">\n<p>Advertisement 4<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-4\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"4\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-4\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p data-async=\"\">But that would require radical change in the way the auto sector currently works since some auto parts reportedly cross the borders of Canada, Mexico or the U.S. as many as eight times during vehicle assembly. That\u2019s partly why there were an estimated 2.5 million truck crossings in 2023 on the Ambassador Bridge, which separates Windsor, Ont., and Detroit \u2014 the two countries\u2019 respective auto-sector capitals.<\/p>\n<h2>Trading treaties<\/h2>\n<p data-async=\"\">The original North American Free Trade Agreement (NAFTA) eliminated nearly all tariffs on trade between Canada, Mexico and the U.S. This changed under the 2018 Canada-United-States-Mexico Agreement (CUSMA), which penalized automakers that do not meet minimum thresholds for how much work on a vehicle is carried out by workers earning a minimum hourly wage of US$16. It also added regional content requirements for how much of the vehicle must be built in North American plants.<\/p>\n<p>In apparent violation of that agreement, Trump is now erecting 25 per cent tariffs on vehicles built in Canada, in addition to existing tariffs on steel and aluminum, and has proposed reciprocal tariffs that are expected to apply a flat rate to every country\u2019s products and come into effect on Wednesday.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_5\">\n<section aria-describedby=\"advertisment5719343092782649460366627234119680\" class=\"ad\">\n<p>Advertisement 5<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-5\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"5\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-5\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>To survive those trade barriers, vehicles built in Canada will need to use as many domestic auto parts as possible, Carney said at his Mar. 27 press conference. By \u201cbackwards integrating\u201d domestic steel and aluminum into auto production, the auto sector could start moving away from its U.S.-based export model, he said.<\/p>\n<p>\u201cWe\u2019re going to have to make some big changes, but we can make those big changes,\u201d he said. \u201cWe do have options; we do have agency; we do have power.\u201d<\/p>\n<p>Building out the domestic auto supply chain could also attract investment in the domestic industry. In the meantime, Carney proposed creating a $2-billion Strategic Response Fund to aid the auto sector during this transformation.<\/p>\n<p>There are, of course, risks and consequences to be considered. For example, auto exports sold into the U.S. bring U.S. dollars into the economy, which affects the value of the Canadian dollar.<\/p>\n<p>Mexico is also a net exporter of auto parts to the U.S. and will be looking for other markets such as Canada for its products. But Canada will need to absorb the vehicles it currently exports, so that relationship may face some tension.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_6\">\n<section aria-describedby=\"advertisment5274501554120841918305187150168064\" class=\"ad\">\n<p>Advertisement 6<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-6\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"6\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-6\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p data-async=\"\">If the tariffs do bring Canada\u2019s auto production to a halt, it would amount to $330 million in losses and two per cent in production volume for each week of closure, with losses growing over time, according to analysts at Oxford Economists.<\/p>\n<p>The tariffs alone are likely to spur more than 2,000 layoffs and reduce auto exports in 2025 by six per cent or $550 million, they said in a note on Monday, and those figures double if Canada imposes parallel 25 per cent counter-tariffs on U.S. vehicles and auto parts.<\/p>\n<h2>Another transformation in progress<\/h2>\n<p>The trade war arrives with the auto sector already in the midst of a major transformation: automakers are seeking to transition to producing battery electric vehicles instead of mainly internal combustion engine vehicles. Achieving the necessary economies of scale and building the required supply chains for this change is expected to be expensive and time-consuming, taking at least a decade.<\/p>\n<p data-async=\"\">The federal government as well as the Ontario and Quebec provincial governments have already committed as much as $52.4 billion to be distributed over the next half-decade or so in the form of tax credits, production subsidies and other support to automakers and battery companies that have agreed to invest $46 billion in an electric vehicle supply chain.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_7\">\n<section aria-describedby=\"advertisment2132425150278808260725961461334016\" class=\"ad\">\n<p>Advertisement 7<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-7\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"7\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-7\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>Allan said he initially thought the governments\u2019 EV strategy cost too much money for the number of jobs it created, but changed his mind in the current context; with Trump pulling the U.S. back from the EV transition and talking about cancelling investments in the EV supply chain, it suddenly makes a lot more sense.<\/p>\n<p>\u201cWe can\u2019t start deleting things that are helping us diversify our trade at this moment,\u201d he said, \u201cespecially not clean energy future opportunities.\u201d<\/p>\n<p>Based on a Transition Accelerator analysis, investments in Canada\u2019s EV supply chain are already showing up in export tables. For example, Canadian battery exports to the U.S. were valued at $1.4 billion in 2024.<\/p>\n<p>The analysis said EVs and EV parts exponentially grew over the past three years, a sign that the nascent industry is finding momentum, even though only a small number of EV supply chain projects have received government support or been built yet.<\/p>\n<p>There is another factor lurking in the background: Canada\u2019s current export-based model of auto manufacturing has led to a sector in decline, one that is shedding manufacturing capacity and running a trade deficit.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_8\">\n<section aria-describedby=\"advertisment8864582372852647912197442307620864\" class=\"ad\">\n<p>Advertisement 8<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-8\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"8\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-8\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>In 2024, auto production in Canada was just under 1.3 million vehicles, a 55 per cent decline from the peak of 2.9 million vehicles manufactured in the early 2000s, according to DesRosiers Automotive Consultants Inc., a research firm. By contrast, Canadians purchased almost 1.9 million vehicles in 2024.<\/p>\n<p>Part of the reason for the trade deficit is that some auto plants in Canada are closed for retooling, but auto production here has been in decline for a decade and hit a nadir in 2021 at 1.1 million vehicles, according to DesRosiers.<\/p>\n<p>\u201cOne of the things that we really have to seriously look at is this question of how you maintain some sort of proportionate representation in that sector of the economy,\u201d Stephen Beatty, who retired as corporate counsel to Toyota Canada Inc. last year, said. \u201cWe\u2019re not the cheapest place to make things, and we aren\u2019t the biggest marketplace. As a result, there are these forces that pull automotive away from Canada.\u201d<\/p>\n<p>Beatty said that despite Trump offering multiple reasons for imposing his tariffs, including fentanyl trafficking and border security, he believes his real goal is to repatriate manufacturing to the U.S.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_9\">\n<section aria-describedby=\"advertisment8899101794412662936566200205836288\" class=\"ad\">\n<p>Advertisement 9<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-9\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"9\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-9\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>That would be a drastic departure from accepted policy that Trump embraced during his first term in office, when his administration signed CUSMA and envisioned all three countries working together to produce automobiles.<\/p>\n<p>Even that free trade agreement marked a shift away from globalization and toward regionalization.<\/p>\n<p>But Beatty pointed out that CUSMA ushered in a rules-of-origin model that encouraged companies to manufacture in North America and laid out how to determine where a vehicle is manufactured, given that it was likely assembled using parts manufactured in multiple countries.<\/p>\n<p>The rules of origin, he said, were a departure from the auto pact\u2019s \u201cduty-remission\u201d scheme, even if both were aimed at integrating North America\u2019s auto market.<\/p>\n<p>\u201cIf I look at what the U.S. administration is saying these days,\u201d Beatty said, \u201cit\u2019s kind of a throwback to the type of trade thinking that was in place in the \u201960s when you wanted to link import and export benefits, and there may be scope \u2026 to return to some elements of that in a negotiated deal.\u201d<\/p>\n<p data-async=\"\">One factor at play is that China\u2019s auto sector in 2024 produced more vehicles than any other country for the first time and, importantly for global trade, its exports have rapidly grown to six million vehicles in 2024 from one million vehicles in 2020, according to the U.S.-based Council on Foreign Relations.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_10\">\n<section aria-describedby=\"advertisment8153635189246958972464966504808448\" class=\"ad\">\n<p>Advertisement 10<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-10\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"10\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-10\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<p>That competitive threat to other countries has not gone unnoticed in either the U.S. or Canada, which both enacted 100 per cent tariffs on Chinese EVs in 2024. Nevertheless, there are lingering concerns and questions about how long such tariffs could persist and whether Chinese EV makers could set up factories in Mexico, essentially creating a backdoor to bring vehicles into the lucrative U.S. market.<\/p>\n<p>How to preserve North American vehicle manufacturing is likely to generate more and more noise if tariffs cripple the domestic sector and China expands its reach.<\/p>\n<p>\u201cCars have always been interesting because they are the apex of good in a manufacturing chain,\u201d Allan said. \u201cIt\u2019s an anchor for your broad-based manufacturing capabilities.\u201d<\/p>\n<p>Vehicles are complex combinations of bent steel and aluminum, rubber and plastic, but they increasingly contain semiconductors, software and even artificial intelligence programming \u2014 the components of a modern economy.<\/p>\n<p data-async=\"\">Tellingly, the intergovernmental economic forum known as the G7, which helps set global policy priorities amongst some of the world\u2019s largest economy countries and which Canada joined in 1976, has never included a nation that lacked a vehicle manufacturing sector.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group ad_counter_11\">\n<section aria-describedby=\"advertisment3137270727404186247252307490111488\" class=\"ad\">\n<p>Advertisement 11<\/p>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-11\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"11\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" data-aqa=\"advertisement\" id=\"ad-11\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p>This advertisement has not loaded yet, but your article continues below.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<section aria-labelledby=\"moreTopicLabel7145718957050684419935640500568064\" class=\"more-topic\" data-aqa=\"embed-more-topic\" data-carousel-component=\"\" data-carousel-icon-button=\"\" data-carousel-type=\"list\">\n<p>Recommended from Editorial<\/p>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li data-evt-val=\"{\" control_fields=\"\" can=\"\" unscramble=\"\" the=\"\" eggs=\"\" on=\"\" auto=\"\" trade=\"\" data-carousel-item=\"\" data-evt=\"click\" data-evt-typ=\"click\"> <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"Honda employees work along the vehicle assembly line in Alliston, Ont., on April 25, 2024.\" data-src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-bc-autos.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=v8m-m55RnrkcSCQlyXfePA\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-bc-autos.jpg?h=96&amp;strip=all&amp;quality=5&amp;sig=MKzE5UGAvumyrxMmB7zNSQ\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-bc-autos.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=v8m-m55RnrkcSCQlyXfePA, https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-bc-autos.jpg?h=192&amp;strip=all&amp;quality=80&amp;sig=75fVfHRonVcteNtZeWuq-w 2x,&#10;                                             https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0402-bc-autos.jpg?h=288&amp;strip=all&amp;quality=80&amp;sig=90u_LybkCjFZCoedkvuQTg 3x\" class=\"lazyload\" height=\"96\" loading=\"lazy\" width=\"96\"\/><\/picture>\n<p><span class=\"more-topic__item-text-clamp\">You can&#8217;t unscramble the eggs on auto trade<\/span><\/p>\n<\/li>\n<li data-evt-val=\"{\" control_fields=\"\" u.s.=\"\" auto=\"\" tariffs=\"\" to=\"\" devastate=\"\" sector=\"\" raise=\"\" costs=\"\" data-carousel-item=\"\" data-evt=\"click\" data-evt-typ=\"click\"> <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"The Canadian and American auto sectors are heavily intertwined, automotive parts can cross international borders up to eight times before a vehicle is finally assembled.\" data-src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0328-mg-auto-industry.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=A1AXRrli84sxZuA5Vn3GKA\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0328-mg-auto-industry.jpg?h=96&amp;strip=all&amp;quality=5&amp;sig=VR-IyKw699RMPsOO008fhg\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0328-mg-auto-industry.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=A1AXRrli84sxZuA5Vn3GKA, https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0328-mg-auto-industry.jpg?h=192&amp;strip=all&amp;quality=80&amp;sig=v3QbMRbKuNQwPRqeilYfrw 2x,&#10;                                             https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0328-mg-auto-industry.jpg?h=288&amp;strip=all&amp;quality=80&amp;sig=_3303J2rz23UzeOeYlojNA 3x\" class=\"lazyload\" height=\"96\" loading=\"lazy\" width=\"96\"\/><\/picture>\n<p><span class=\"more-topic__item-text-clamp\">New U.S. auto tariffs to devastate sector, raise costs<\/span><\/p>\n<\/li>\n<li data-evt-val=\"{\" control_fields=\"\" tells=\"\" big=\"\" three=\"\" to=\"\" move=\"\" production=\"\" the=\"\" u.s.=\"\" data-carousel-item=\"\" data-evt=\"click\" data-evt-typ=\"click\"> <picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"The North American automotive supply chain remains highly integrated across the U.S., Canada and Mexico.\" data-src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0306-mg-automakers.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=r3QKqxPmUCD9KLDjmgm8oQ\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0306-mg-automakers.jpg?h=96&amp;strip=all&amp;quality=5&amp;sig=0MnggDBwe0VchQgimypyvw\" srcset=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0306-mg-automakers.jpg?h=96&amp;strip=all&amp;quality=80&amp;sig=r3QKqxPmUCD9KLDjmgm8oQ, https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0306-mg-automakers.jpg?h=192&amp;strip=all&amp;quality=80&amp;sig=7fPgKkm1KZQ9zgarW6w16A 2x,&#10;                                             https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/03\/0306-mg-automakers.jpg?h=288&amp;strip=all&amp;quality=80&amp;sig=rZYZxWZFLi7HcmF_qvTxiQ 3x\" class=\"lazyload\" height=\"96\" loading=\"lazy\" width=\"96\"\/><\/picture>\n<p><span class=\"more-topic__item-text-clamp\">Trump tells big three to move production to the U.S.<\/span><\/p>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<p>In Canada, vehicles rank as the country\u2019s second-largest export, valued at $51 billion, so a collapse could send ripples through the economy at a time when the total impact of all the Trump tariffs \u2014 which include orders targeting all Canadian goods not compliant with CUSMA, steel and aluminum as well as a flat reciprocal tariff rate \u2014 could trigger an economic recession.<\/p>\n<p>Against that backdrop, everyone from Ontario Premier Doug Ford to Carney is saying Canada needs to figure out a solution to control its economy.<\/p>\n<p>\u201cYou cannot have the entire auto chain come to a crashing halt; that will send ripples through the economy,\u201d Beatty said. \u201cIt has to continue and companies have to do their best to minimize the impacts and try to squeeze margins anywhere they can up and down the supply chain, but some of it will get passed on.\u201d<\/p>\n<p data-async=\"\"><em>\u2022 Email: gfriedman@postmedia.com <\/em><\/p>\n<p data-async=\"\"><em><strong>Bookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add financialpost.com to your bookmarks and sign up for our newsletters here.<\/em><\/p>\n<\/section>\n<section class=\"article-content__content-group article-content__content-group--story\">\n<p>Article content<\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt-val=\"{\" control_fields=\"\" data-evt-typ=\"page_scroll\">\n<p>Share this article in your social network<\/p>\n<\/section>\n<\/div>\n\n<br \/>Canada&#8217;s auto sector considers going it alone amidst tariffs<\/a><br \/>\n<br \/>2025-04-01 16:06:40<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links Electric Vehicles Economy Transportation Autos Vehicles rank as Canada&#8217;s second-largest export, valued at $51 billion, so a collapse could ripple through the economy Get the latest from&#8230;<\/p>\n","protected":false},"author":2,"featured_media":58144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":{"0":"post-58143","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy"},"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/58143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=58143"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/58143\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/58144"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=58143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=58143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=58143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}