Trump auto tariff relief plans don’t go far enough, Canadian industry leaders say

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Canadian auto industry officials say U.S. President Donald Trump’s plan to relieve carmakers of some tariffs amounts to token half-measures that will not meaningfully reduce the negative impact of his trade policies.

Mr. Trump announced Tuesday he will reduce the duties on imported parts used in U.S.-made cars and drop plans to stack metals and other tariffs on top of foreign auto levies.

U.S. tariffs on car importers have been in place since April 3 and a tariff on imported auto parts is still scheduled to go into effect on May 3.

Mr. Trump’s concessions were made after the U.S. auto industry lobbied for relief from the 25-per-cent tariffs, warning the levies will cause inflation, reduced demand for cars and job losses.

However, the head of the Canadian industry group that represents Honda Motor Co. Ltd. and Toyota Motor Corp. – Ontario’s largest auto manufacturers – and other foreign brands called the moves a “token gesture” that will bring little relief to carmakers.

“I don’t know that it’s really going to do anything,” said David Adams, chief executive officer of Global Automakers of Canada, adding, “I mean, it’s better than nothing.”

“I was hoping that they might back off of the auto-parts tariffs, but it looks like that’s still going to move ahead on May 3 unless there’s some other intervention between now and then,” Mr. Adams said by phone.

Flavio Volpe, head of the Automotive Parts Manufacturers’​ Association, which represents 230 Canadian suppliers, said Mr. Trump’s concessions do not go far enough.

“It appears that the President is preparing to counter the U.S. auto industry’s written request to remove the tariff threat on cars from Canada by making partial measures,” Mr. Volpe said. “Partial measures that eat profits up and risk insolvency are not acceptable. The right level is zero tariffs.”

Ford Motor Co. and General Motors Co. did not respond to requests for comment. After news of the tariff changes, GM cancelled the release of its Tuesday morning first-quarter financial results and withdrew its full-year guidance, which did not take tariffs into account. The release was rescheduled until Thursday.

After signing an order changing his tariff policy on cars, Mr. Trump was expected to speak on Tuesday night in Michigan, the centre of the U.S. auto industry.

Details of his changes were not available midday on Tuesday.

“President Trump has had meetings with both domestic and foreign auto producers, and he’s committed to bringing back auto production to the U.S.,” Treasury Secretary Scott Bessent told reporters on Tuesday.

“So we want to give the automakers a path to do that quickly, efficiently, and create as many jobs as possible.”

The Wall Street Journal reported carmakers in the U.S. that pay to import autos will not also pay tariffs on goods that include steel and aluminum, raw materials widely used in manufacturing.

Additionally, U.S. automakers that pay 25-per-cent tariffs on auto parts from Canada and other places will be reimbursed for the tariff up to 3.75 per cent of the value of the U.S.-made car, for one year. This amount falls to 2.5 per cent in the second year, and is eliminated by the third year, The Wall Street Journal reported.

“It doesn’t seem like much of an offset,” Mr. Adams said.

“The whole thing just seems to be sort of typical of the President’s actions here where it’s a ‘shoot first, aim later’ type of approach to things,” he said, “trying to figure out how to how to get himself out of a jam recognizing that the situation is precarious for the automotive industry.”

U.S. lobby groups representing the Detroit Three automakers, parts suppliers and dealers last week urged the Trump administration to halt the tariffs.

“Tariffs on auto parts will scramble the global automotive supply chain and set off a domino effect that will lead to higher auto prices for consumers, lower sales at dealerships and will make servicing and repairing vehicles both more expensive and less predictable,” the group said, echoing warnings from Canadian executives that tariffs will quickly bring auto assembly to a halt.

U.S. automakers on Tuesday told other media they welcomed Mr. Trump’s shift. Ford said the change “will help mitigate the impact of tariffs on automakers, suppliers and consumers.”

Mary Barra, GM’s CEO, said the company is “grateful to President Trump for his support of the U.S. automotive industry and the millions of Americans who depend on us.”