Canada’s Auto Union Chief Takes Aim at Trump Tariff ThreatCanada’s Auto Union Chief Takes Aim at Trump Tariff Threat

OTTAWA – Leaders within Canada’s auto sector say Canadian politicians need to take a firm and consistent line against trade threats being made against their country and industry by incoming U.S. President Donald Trump. 

With the president-elect even suggesting that the U.S. cease buying Canada-made automobiles altogether, as he threatens to impose 25% tariffs on all imports from Canada upon his Jan. 20 swearing-in, the national president of Canada’s main autoworkers union Unifor, Lana Payne, says: “If we have a trade war it will be very, very problematic for workers everywhere. It will create a lot of pain and to a lot of people.”

Payne tells WardsAuto she has contacted the UAW for discussions: “This is something workers on both sides of the border will have to form strong allegiances on.” 

In Canada, she says: “We have to have a unified front. We must make sure we defend these jobs and industries by making ourselves more resilient. Having strong industry plans – federal and provincial – to make sure we protect them from volatility, and to make sure we’re taking advantage of our (Canadian) procurement dollars, building things in Canada, such as electric buses.” 

One problem is that Canada’s politics are anything but united, with Prime Minister Justin Trudeau announcing his resignation Jan. 6, ahead of a general election that his ruling Liberal Party is likely to lose, after a leadership election ending March 9.

Brian Kingston, Canadian Vehicle Manufacturers’ Assn. CEO and president, says: “It would be ideal if we have a clear leadership structure at the federal level. Now we have a fractured and confused strategy. We need a clear and serious plan.” Should tariffs be imposed, he called on the federal government to “to do as little harm as possible through retaliation,” recognizing how the huge U.S. domestic market enables it to withstand trade losses. 

Payne also stresses the close integration of the U.S., Canadian and Mexican auto sectors, with Canadian assemblers importing significant volumes of American-made parts, whose sale could be impacted by any retaliatory tariffs that Canada imposed following U.S. duty hikes. 

David Adams, president and CEO, Global Automakers of Canada, says: “About 50% of every car built in Canada is comprised of American parts and components, so if the tariffs end up essentially shutting down Canadian production all of those U.S. parts and components facilities would suffer as well.” 

This potential for disruption is highlighted by a spokesperson for Vic Fedeli, Ontario minister of economic development, job creation and trade. She tells WardsAuto: “Ontario proudly builds automobiles and auto parts in partnership with American companies and American workers. We do not build goods FOR the United States, we build them WITH the United States. Auto parts cross the border up to eight times before a car rolls off an assembly line, which underscores how integrated and mutually beneficial our trading relationship is.” 

Concerns were ramped up when Trump told a press conference on Jan. 7 in Mar-a-Lago, FL, that he wanted to force Canada into the U.S. through “economic force.” That would include halting trade: “We basically protect Canada. But here’s the problem with Canada. I have so many friends up there. I love the Canadian people. But we’re spending hundreds of millions a year to protect it. We lose in trade deficits. We don’t need their cars. They make 20% of our cars. I’d rather make them in Detroit,” said Trump.

In reality, the auto trade between the two countries is largely balanced. Canadian exports of cars and light-duty vehicles were worth C$52.5 billion ($36.6 billion) in 2023, according to Statistics Canada, with exported trucks worth C$3.8 billion ($2.6 billion), and parts at least C$22.2 billion ($15.4 billion). U.S. exports to Canada (in 2022, the latest figures available) according to the same data source, were worth $28.5 billion for cars and light-duty vehicles; $5.4 billion for trucks; and at least $20 billion for parts.  

Unifor’s Payne adds that Canada exports significant volumes of steel and aluminum to the U.S. auto sector, which also utilizes Canadian energy exports. Canada exported an average of 3,315 GWh per month in 2023, worth $3.2 billion year-long, according to the U.S. Energy Information Admin. Should Trump impose 25% tariffs, Ontario Premier Doug Ford has threatened to cut off Canadian power supplies that flow across Ontario borders to neighboring U.S. states, including Michigan and its major industry, autos. 

Payne, the president of Canada’s largest private sector union, says such supplies give Canada leverage in any trade war: “We will have to push back if we’re put in a box.” Industry lobbyist Adams adds: “I think it is evident that the uncertainty – even with the threat of tariffs – is freezing out investment in Canada and one could expect that this would be the case with actual tariffs.” 

Ambassador Bridge between Detroit and Windsor, ON, major link for transport of autos, auto parts.

Payne is confident that major battery-electric-vehicle-focused investments in Ontario province announced in the past 18 months, such as Stellantis and LG Energy Solution’s battery plant in Windsor, and Stellantis’ BEV-focused retooling in Brampton and Ford’s retooling plans for its Oakville plant are safe. However, “It’s not the investment decisions of the moment. It’s the future that we have to worry about,” she says, assessing the potential loss of investment for later this year or in four years’ time. One goal of Trump’s threats is to push investment back into the U.S., she warns. 

American action against its neighbors also ignores the challenge faced by all of North America from state-backed Chinese auto manufacturing capacity, says Payne: “We have bigger problems here and (the U.S.) should not be attacking its neighbors with whom they have historical trade.”