Automobiles drive in traffic on traditionally the busiest travel day, the day before American Thanksgiving, along the Long Island Expressway in the Queens borough of New York City, on Nov. 27, 2024.Shannon Stapleton/Reuters
U.S. President Donald Trump’s tariffs on imports from Canada and Mexico will hurt the Detroit Three automakers and drive up vehicle prices for their customers, says the executive chairman of auto parts maker Martinrea International Inc. MRE-T
Rob Wildeboer, speaking on an analyst conference call one day after Mr. Trump once again delayed imposing tariffs on the Canadian and Mexican auto sectors by a month, said the U.S. car giants – Ford, General Motors and Stellantis – will face massive costs under the President’s trade policy.
“The Detroit Three will be weaker,” Mr. Wildeboer said Thursday. “They will have to charge more for their pickups trucks. The people who buy them are the voting base for this president.”
He dismissed Mr. Trump’s idea that carmakers will move plants to the U.S. from Canada and Mexico to avoid tariffs, pointing to the massive costs of relocation and retooling, as well labour shortages and the supply lines that surround the plants after decades of integration.
“I’m going to put on my legal hat here and say the tariffs under the USMCA are illegal,” Mr. Wildeboer said, noting they usurp the power of Congress and that a raft of lawsuits are set to be filed should the levies go in place.
“I think a lot of people are saying, ‘What they heck is going on here? This hurts Americans.’”
Vaughan, Ont.-based Martinrea employs 19,000 people at 56 factories around the world, making engine blocks, suspensions parts and other components.
Auto unions in Canada, U.S. at odds over tariffs
On Thursday, Mr. Trump once again backed away from his promise to impose 25-per-cent tariffs on Canadian and Mexican imports. He said the levies on goods covered under the United States-Mexico-Canada Agreement (USMCA) will be delayed until April 2, after facing retaliatory measures from Canada and condemnation by business groups on both sides of the border.
He previously said the tariffs would be laid on Feb. 2, which was then pushed to March 4. On Wednesday, he paused the tariffs on the auto sector by another month.
Parts maker Linamar Corp.’s LNR-T executive chair, Linda Hasenfratz, on Wednesday warned that the tariffs will cost automakers “billions.”
U.S. tariffs on Canada aluminum and steel imports are scheduled to go into effect next week Wednesday.
Mr. Wildeboer said he is looking forward to the renegotiations of the USMCA. He said there is a chance to better protect the North American auto industry by targeting the four million or so vehicles imported to the U.S. every year from China and Europe. Under the current agreement, such cars face tariffs of just 2.5 per cent under local content rules. That could increase to 25 per cent, he said.
Canada’s trade surplus in January hit a 32-month high, as U.S. importers of Canadian goods stocked up ahead of the Trump tariffs. Exports of autos and energy products helped Canada post a surplus of $3.97-billion, with overall exports valued at a record $75.5-billion, a 5.5-per-cent rise from December, Statistics Canada said on Thursday.
Exports of cars and parts rose by 12 per cent, and energy exports increased by 4.8 per cent. Canada exported $8.99-billion worth of motor vehicles, up $1-billion from the previous month.
Ms. Hasenfratz said Linamar shipped industrial and agricultural machinery to the U.S. ahead of Mr. Trump’s deadline in order to be able to deliver tariff-free equipment to customers “for some time.”
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, which represents dozens of Canadian suppliers, called the stockpiling of parts ahead of the expected tariffs prudent. But he said most automakers and large suppliers of components do not have the warehouse space to stockpile inventory beyond 24 or 48 hours’ requirements, he said.
Canadian National Railway and Canadian Pacific Kansas City, Canada’s two major freight railways, saw carloads of autos and parts fall by 1.6 per cent, to a total of 52,000 in January and February, according to the American Association of Railroads. The data, which includes the railways’ U.S. and Mexican operations, suggest the rise in auto shipments is moving by truck, not rail.
What questions do you have about tariffs?
The tariffs announced by U.S. President Donald Trump have upended decades of free trade in North America, causing chaos on both sides of the border.
Alongside the chaos come many questions about how this will affect Canadians' lives, and Globe reporters are here to help you navigate those. Perhaps you're curious about how this might impact the sector you work in, or maybe you'd like to know what this means for your mortgage. Tell us what you want to know about these new levies, and we'll do our best to answer. Please submit your questions below or send an email to audience@globeandmail.com with "Tariff Question" in the subject line.