Honda CR-V and Civics are transported from the Honda Canada plant in Alliston, Ont. Canada's automotive exports to the U.S. saw a major drop in April as tariffs hit the industry.Fred Lum/The Globe and Mail
Canada’s exports of automobiles to the United States fell by 23 per cent in April as vehicle makers cut production in the first month that President Donald Trump’s tariffs kicked in.
Combined with parts, automotive shipments to Canada’s largest trading partner plunged by more than 17 per cent in value from the previous month, the largest sectoral drop in merchandise trade shipments reported by Statistics Canada on Thursday.
Carmakers based in Ontario have responded to the tariffs by slashing production, idling assembly lines and laying off workers.
“The tariff impacts are significant, and it makes it very challenging to build a vehicle in Canada and export it to the U.S. in the face of a 25-per-cent tariff,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, which represents Ford Motor Co., General Motors Co. and Stellantis NV in Canada.
Canada’s trade deficit hits record high $7.1-billion as tariffs hammer exports
The U.S. and Canadian auto industries are highly integrated, an efficient system built on decades of free trade. The U.S. is the buyer of almost all of Ontario’s auto production, Mr. Kingston said in an interview.
The Globe reported Thursday that Prime Minister Mark Carney is in talks with Mr. Trump to negotiate a framework on a trade and security agreement.
“This data just underlines the importance of getting to an agreement with the Americans as quickly as possible, removing these tariffs and returning to North American automotive production,” Mr. Kingston said.
Mr. Trump says his rollout of tariffs on most trading partners is intended to bring home manufacturing and spur countries to stop the flow of fentanyl and illegal migration while balancing trade.
His tariff policies have changed repeatedly, leading to chaos in the auto industry and other sectors.
The U.S. auto industry has called the tariffs inflationary and bad for sales and production. It takes years and billions of dollars to move supply lines and factories, industry members and experts say.
Canadian-assembled vehicles are subject to a 25-per-cent tariff, reduced by the amount of U.S. content, which is typically about 50 per cent. Canadian parts enter the U.S. tariff-free but are subject to duties when attached to a Canadian-made car.
Canadian auto-parts factories depend on vehicle-assembly plants for about half of their sales.
Ahead of the tariffs, Canadian vehicle exports rose by 21 per cent between November and March, Statistics Canada said, as U.S. importers rushed to beat the duties.
Canada’s overall exports fell by almost 11 per cent in April and imports dropped by 3.5 per cent, widening the trade deficit with all trading partners to a record $7.1-billion.
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association that represents Canadian suppliers, said the tariffs are hurting companies in Canada and the U.S. He noted three of Ontario’s vehicle exporters are Detroit-based, and are the importers that bear the cost of the tariffs.
“We’re so intertwined, half of that effect is being borne by American balance sheets,” Mr. Volpe said, calling the drop in shipments a “self-inflicted wound.”
Ontario is home to a Stellantis minivan and Dodge Charger plant in Windsor; a General Motors pickup truck plant in Oshawa and a parcel van factory in Ingersoll; a Honda factory in Alliston; and Toyota plants in Cambridge and Woodstock. Two other sites are closed and awaiting retooling for new vehicles: Ford Motor Co. in Oakville and Stellantis in Brampton.
Since the tariffs kicked in, GM and Stellantis have announced layoffs, production cuts or delays and periodic shutdowns of assembly lines. Honda has delayed a massive electric-vehicle project.
Honda and Toyota are maintaining full production at their Ontario plants, said David Adams, chief executive officer of Global Automakers of Canada, which represents several overseas brands.
“Obviously I think the longer the tariffs and the uncertainty around the tariffs continues, the more challenging I think things become, but I think right now they remain optimistic,” he said.