The Real Donald Trump Threatens the Canadian Auto Industry

The incoming Trump administration could possibly tax Canadian made cars at the same rate as Mexican ones. 

According to the Globe and Mail, Sean Spicer, a spokesman for president-elect Donald Trump, said border taxes will apply “when a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico or any other country seeking to put U.S. workers at a disadvantage.”

This is the first time Canada has been specifically mentioned in the administration’s rhetoric on auto exports, in 2016 General Motors shipped the Chevrolet Equinox and Impala, Cadillac XTS, and the GMC Terrain south from Ontario, although the Impala and Terrain will no longer be produced in Canada moving forward.

Cross-town rivals Ford and FCA also export a significant amount of product from Ontario, with Ford making the Edge and Flex, along with the Lincoln MKX and MKT in Oakville, Ontario; while FCA makes the Challenger, Charger and 300 in Brampton, Ontario, and the Grand Caravan/Town & Country, and Pacifica in Windsor.

Toyota and Honda also make a significant chunk of their bread and butter product in Canada as well, the Civic and CR-V come from Alliston, while the Corolla has traditionally come from Cambridge and the Rav4 from Woodstock.

That’s before getting into the significant number of components manufactured in Canada, for example, should Trump’s plan go through all GM LGX V6 motors made in St.Catherines, Ontario will be subject to tax. So even though your brand new V6 Camaro rolled off an assembly line in Michigan, you will be taxed on its Canadian made engine.

In total, the five car makers doing business in Canada exported roughly $60-billion in product to the U.S during 2016.

The fact that the Trump administration could go after Canadian-made cars is supremely ironic considering Canadian auto union boss, Jerry Dias, was supportive of the Donald’s tough talk. Dias was quoted just last week saying Trump had better things to do than go after the Canadian auto sector, “He’s throwing grenades everywhere right now, and it’s working for him. But his ire is not at Canada, it’s at Mexico.”

Should the administration’s protectionist policies come to pass it will certainly spell disaster for cars made in Canada. Already, Ontario is a tough sell for manufacturing, our environmental policies, astronomical energy prices and skilled workforce offer none of the cost advantages as facilities south of the Rio Grande.

Margins may be big enough on vehicles hecho en Mexico to make import taxes at least stomachable; but the already dwindling Canadian auto sector may not survive the cross-fire.

Comments