Auto workers leave the Stellantis Windsor Assembly Plant in Windsor, Ont., on April 2.Dax Melmer/The Globe and Mail
Canada broadly averted additional levies in U.S. President Donald Trump’s Wednesday launch of global trade actions, but the auto sector saw no reprieve as planned tariffs kick in Thursday.
That leaves the Canadian auto industry braced for likely disruption, layoffs and possible production cuts as the tariffs are applied to vehicles sent to the U.S., according to industry experts.
Mr. Trump announced the auto tariffs last week and made them the centrepiece of his White House press conference on Wednesday as he unveiled sweeping levies on a long list of trading partners.
“Jobs in factories will come roaring back to our country,” Mr. Trump said of his trade policy. Experts and economists disagree, saying it takes years to move production lines and rebuild supply chains. Meanwhile, stock markets have tumbled amid fears of inflation and an economic recession.
The tariffs on Canadian-made autos will be reduced based on their U.S.-made content. Most of the vehicles assembled at Ontario’s plants have about 50-per-cent U.S. content. The tariffs are paid by the U.S. importers of autos – the carmakers themselves – and it is expected they will pass on the costs to consumers, driving inflation and slowing the economy. The U.S. also plans to apply a tariff to auto parts entering the U.S. as early as May 3.
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, which represents 230 Canadian suppliers, says the industry cannot bear double-digit increases in costs. He says the industry on both sides of the border will quickly be hobbled when parts makers or car makers cease production because of unaffordable charges.
“Start the countdown to a shutdown,” Mr. Volpe said by phone. “You can’t make cars without all the parts. It just takes one major parts supplier or major automaker to say, ‘We’re not doing this.‘”
Automakers and parts suppliers in Canada employ 125,000 people. Ontario is home to auto plants run by Ford F-N, General Motors GM-N, Stellantis STLA-N, Honda HMC-N and Toyota TOYOF. They made a total of 1.6 million passenger vehicles in 2024, according to the Canadian Vehicle Manufacturers’ Association, most of which were exported to the United States.
Globe economics reporter Mark Rendell says Wednesday’s tariff announcement by President Donald Trump saw Canada not hit as hard as predicted, but that the trade war has now gone global.
The Unifor leader at General Motors’ pick-up truck plant in Oshawa, Ont., says the union is still trying to figure out how the facility will be affected by U.S. tariffs. The site east of Toronto makes heavy- and light-duty Chevrolet Silverados. Under the tariff announcement last week, Jeff Gray, who represents 5,000 members at the Oshawa plant – including 3,000 GM employees – said it is not clear if the tariffs on non-U.S. content cover the heavy-duty models.
After months of Mr. Trump’s whipsaw tariff pronouncements, the uncertainty has persisted, and the worry has taken a toll on union members.
“It’s been such a long process,” Mr. Gray said by phone. “It’s gone from the members were nervous or anxious to now they’re defiant. We’re sick of being antagonized and we’re not going to let these jobs leave and people are ready to fight.”
The uncertainty coupled with fears the tariffs will drive inflation and spur a recession have sent stock markets plunging. Ford Motor’s share price has fallen by 11 per cent on the New York Stock Exchange since Nov. 25. GM’s shares are down by 20 per cent.
“Tariffs are taxes that hurt consumers by increasing costs, driving up inflation, and unfairly impacting workers on both sides of the border,” said David Adams, head of Global Automakers of Canada, an industry group that represents Honda, Toyota and several other overseas brands.
Meanwhile, Canadians are rushing to buy cars as the tariff war escalates. Consultancy DesRosiers Automotive says an estimated 185,000 cars were sold in March, an 11-per-cent increase over March, 2024.
Prime Minister Mark Carney has threatened to hit the U.S. with retaliatory tariffs that might drive up the price of U.S.-made automobiles.
Some car buyers are not waiting to find out.
DesRosiers says March’s sales are the highest for that month since 2018, and, if the rush continues, will put seasonally adjusted annual sales at just over two million.
U.S. tariffs of 25 per cent on imported cars begin on April 3. Canadian-made vehicles will be taxed at a lower rate, based on their U.S. content, and similar tariffs on auto parts are expected soon. This is on top of U.S. tariffs on aluminum and steel – raw material for car parts – and goods that fall outside the continental free-trade agreement. Chris Murray of ATB Capital Markets recently told The Globe and Mail the price of a car in Canada could go up by as much as $5,000, once all the layers and countermeasures are added in.
Prices in the U.S. are expected to rise by a similar amount.
First-quarter Canadian car sales are up by almost 3 per cent, year over year, to 425,000 vehicles, DesRosiers says. General Motors led the pack with 74,000 cars sold, a rise of 17 per cent.