If there’s one market in the American market that has faced the specific target of U. S. President Donald Trump’s tax threats, it’s Canada’s car market. Trump has stated that he wants to “make the vehicles in Detroit,” implying that he wants to create a completely private American car industry in place of Canada. However, experts claim that the push may end up costing the United States tens of billions of dollars, and that the squeeze might not be worth the effort. å In an interview with Fox News earlier this month, Trump said Canada” stole” the auto market from the United States. ” If you look at Canada, Canada has a pretty large car market. They robbed us of it. They stole it because our citizens were driving while they were sleep, according to Trump. He added,” If we don’t make a deal with Canada, we’re going to put a big tariff on cars. Could be a 50 or 100 per cent because we don’t like their vehicles. We want to make the cars in Detroit “.But can that be done?
View picture in full display
A chart showing the locations of automobile factories in Canada. ” It’s not feasible”, said Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association. It’s not feasible to ship the entire North American automotive industry to the United States, he continued,” We’ve had policies purposefully designed to produce an integrated North American business.” Since the 1960s, the mechanical manufacturing industry and its supply chain have been deeply integrated both in Canada and the United States. In 1965, former prime minister Lester B. Pearson and past U. S. leader Lyndon B. Johnson signed the Canada– United States Automotive Products Agreement, commonly known as the Vehicle Pact.
View picture in full display
Canada’s mechanical parts manufacturing sector, in numbers.
The two nations ‘ auto parts and pieces were exempt from taxes after the deal. This was in effect until 1994, when the North American Free Trade Agreement ( NAFTA ) went into effect, extending free trade to all sectors, not just car manufacturing. In 2018, NAFTA was replaced by the Canada-United States-Mexico Agreement ( CUSMA ), which is up for re-negotiation in 2026.1: 49
If you speed up car payments as Trump imposes metal taxes? This has resulted in the creation of contracts between automobile manufacturers and suppliers for billions of dollars in terms of facilities, infrastructure, and contracts. If Trump imposes taxes, this would mean car manufacturers would have to split some of their contracts and leave infrastructure to walk to the U. S. Flavio Volpe, president of the Automotive Parts Manufacturers Association, said,” When you break a supplier contract, you owe the money. We think closure costs are upwards of US$ 500 million on a ( car manufacturing ) plant “.Canada has 14 car manufacturing facilities, all in Ontario. The American automakers Stellantis, which is largely owned by Americans, has three crops in Canada, while General Motors and Ford Motor Company, which are both owned by Americans, have three. By Volpe’s measure, closing costs on nine species alone would be around US$ 4.5 billion. It would cost billions more to develop them entirely in the United States, which has higher labor costs and currency prices than Canada. Ford made the announcement in 2023 that they would invest US$ 2 billion to construct a fresh plant in South Carolina. Volpe claimed that US$ 2 billion is a reasonable measure of the estimated cost of building each flower. For nine flowers, that had cost US$ 18 billion. For all 14 plants, it would cost$ 28 billion. This estimate includes neither the 26 automobile manufacturing plants in Mexico, nor Canada’s large automobile parts manufacturing business. ” There are 1, 400 parts and tools facilities in Canada. There are 156 Canadian owned parts and tools manufacturing facilities in the U. S. in 18 U. S. states that employ 50, 000 Americans”, Volpe said. According to Kingston,” about 22 % of the vehicles used in the United States last year were produced by Canada and Mexico.”
4.7 magnitude earthquake rattles parts of B. C. Friday
Canadians call Wayne Gretzky a’ traitor’ after tense 4 Nations hockey final
He added the cost to replace both manufacturing bases would be “phenomenal”. It is a very conservative estimate to say that US$ 50 billion will be spent onshore the entire industry. More than US$ 28 billion has been announced by automakers and suppliers in North America since 2020, according to him, if you consider the amount of investment. It would also take a long time, he said. ” That would take years, anywhere from three years to a decade, to build out assembly plants on that scale. And it would cost billions of dollars”, he said. Volpe predicted that some of America’s largest automakers might not be able to survive the current era. It is an impossible hypothetical because the businesses you would force them to do would go bankrupt, he said. 2: 06
Trump’s tariffs an’ existential threat’ to Canada, Joly saysDimitry Anastakis, professor at the Rotman School of Management at the University of Toronto, said,” You’d be literally talking about uprooting plants that have been in place for decades where companies have spent billions of dollars “.In recent years, car companies have invested billions in their Canadian facilities to match China’s dominance in the EV sector. Moving those plants would require that their investments be wiped out. ” Stellantis has that plant in Windsor, where they build the Dodge Charger. He claimed that they have just retooled that line to allow it to build both EV Dodge Chargers and internal combustion engines. The benefits of keeping Canada and Mexico in the North American supply chain go beyond just the dollar value, according to Kingston, “if you’re going to try to bring that home.” ” What makes us so attractive is we have a highly educated, highly skilled workforce. We have people who are very close to the industry and have skills they can impart to it, he said, and we have a history of manufacturing cars. Chinese automaker BYD surpassed Elon Musk’s Tesla as the top EV manufacturer in the world in 2024. According to Kingston, the United States needs Canada to have a chance of outperforming China in the EV race. China is in charge of about 80 % of the inputs used in advanced batteries. Canada is the only other place you can get your food from in the Western Hemisphere. He claimed that Canada has the full suite of minerals needed to produce batteries for the next-generation of electric vehicles. 2: 04
Trudeau, premiers discuss easing interprovincial trade barriersAnastakis said the North American consumer will suffer the consequences of Trump’s trade war. If tariffs are passed and this uncertainty persists, cars will be significantly more expensive for us in North America. We’ll have fewer car options. When the rest of the world accelerates their transition to EVs, we’ll be driving fossil fuel cars, he said.
