Trump’s 25% tariffs an existential threat to Canada’s auto industry

DETROIT — There’s growing concern that President-elect Donald Trump‘s plan to impose 25% tariffs on Canadian imports would be an existential threat to the country’s recovering automotive industry.

Potential tariffs on vehicles and automotive parts are particularly alarming for the province of Ontario, the epicenter of Canada’s auto industry. Five automakers — Ford Motor, General Motors, Stellantis, Toyota Motor and Honda Motor — produced 1.54 million light-duty vehicles last year in the province, largely for U.S. consumers.

“It’d be terrible. It’d not only devastate Canadian jobs, it’d devastate American jobs,” Ontario Premier Doug Ford told CNBC during a phone interview.

A tariff is a tax on imports, or foreign goods, brought into the U.S. They are paid for by companies, which some fear would simply pass any additional costs on to consumers.

Ford, who said he has not spoken with Trump directly, argued that any tariffs would be harmful to both sides of the border.

He said raw materials and parts routinely pass across the border multiple times before being used in the final assembly of a vehicle. Tariffs, he warned, would increase prices, which could then slow production and eliminate jobs.

“We have a trade agreement right now. Things have been working,” Ford said. “I’ve said it publicly: I’d love to do a bilateral trade deal with the U.S. And Mexico wants a trade deal, we’ll do a bilateral trade deal with Mexico. But Mexico, if they want a seat at the table, they have to follow the rules.”

Trump has said he will impose an additional 10% tariff on goods from China and a 25% levy for Canada and Mexico, though he has offered few details, such as if there would be exceptions. He has he said plans to invoke “national security” concerns to enact such hikes, rather than seeking congressional approval, saying illegal immigration and the illicit drug trade are causing concerns on the border, justifying the tariffs.

Putting tariffs on components could add $600 to $2,500 per vehicle on parts from Mexico, Canada and China, according to estimates in a Wells Fargo analyst note. Prices on vehicles assembled in Mexico and Canada — which account for about 23% of vehicles sold in the U.S. — could rise $1,750 to $10,000.

Such tariffs and increased costs would add to problems for embattled Canadian Prime Minister Justin Trudeau, as he fends off calls for his resignation.

Ontario recently launched a multimillion-dollar ad campaign in the U.S. to promote its role as a key trading partner and “ally to the North.”

Ontario, as a province, is the third-largest trading…