Canadian Automotive Parts Industry Fears Production Halts Over Trump Tariffs
Canadian auto parts suppliers are sounding alarms about the potential tariffs coming from the Trump administration, according to Kelley Blue Book.
President Trump signed an executive order on Saturday for 25% tariffs on all goods coming from Mexico or Canada, as well as 10% on goods from China. However, as of yesterday, Trump announced he would be pausing the Canada and Mexico tariffs for 30 days to negotiate with the two countries.
In the meantime, there’s been much chatter about how the tariffs will impact the automotive industry. Two analysts—one from Wolfe Research and another from TD Economics—both agreed that the price of a new car would rise by $3,000 on average.
A single vehicle component typically crosses borders several times during the manufacturing process. American University professor Frank DuBois, who leads A.U.’s annual Made in America Auto Index, said that attempting to track where every part comes from would be a nightmare for automakers.
These sentiments have been compounded by recent statements from those in the Canadian auto parts industry.
“The auto sector is going to shut down within a week,” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers Association. “At 25%, absolutely nobody in our business is profitable by a long shot.”
Global Automakers of Canada CEO David Adams has also expressed this, adding that automakers and suppliers may stop production altogether.
“I think we will pretty quickly stop making vehicles in North America,” said Linda Hasenfratz, CEO of Linamar Corporation, which is the second-largest parts manufacturer in Canada. “Because nobody can absorb this kind of cost. I’m going to say it’s not more than a week before production halts. You can’t make a car unless you have every part.”
