An international border marker is pictured as vehicles line up to enter the United States from Canada at the Peace Arch crossing in Blaine, Wash., on March 5.JASON REDMOND/AFP/Getty Images
Tariffs on steel and aluminum will drive up costs for consumers and manufacturers in the North American auto industry as it grapples with a new front in the trade war ignited by U.S. President Donald Trump.
Mr. Trump on Wednesday levied 25-per-cent tariffs on imported steel and aluminum, including auto parts, raising a new hurdle for an industry that for decades has built integrated supply chains based on free trade.
Canada and the European Union swiftly countered the U.S. move.
Canada levied tariffs on U.S. steel, aluminum and other goods worth $29.8-billion, effective Thursday, while Europe applied duties worth $40-billion on metals, home appliances and other goods.
Mr. Trump earlier this month slapped 25-per-cent tariffs on a range of Canadian goods, and delayed a new round until April 2. That’s when 25-per-cent tariffs on autos are scheduled to be applied, a move the North American industry has repeatedly warned will lead to its quick shutdown.
“Costs for American consumers and businesses are going to go up,” said David Adams, president of Global Automakers of Canada, which represents Toyota, Honda and several other manufacturers.
Bill Hanvey, chief executive of the U.S. automotive supply chain industry group Auto Care Association, said the vehicle-parts industry will face “significant repercussions” from the latest round of tariffs.
“Many specialty steel products essential to the automotive-repair sector are not readily available from domestic sources,” Mr. Hanvey said. “We acknowledge the administration’s goals of achieving fair trade and boosting U.S. manufacturing, but we also urge consideration of the potential unintended consequences these tariffs could have.”
On Wednesday, Matt Blunt, president of the Washington-based Automotive Policy Council, which represents Ford, General Motors and Stellantis, said he is still reviewing the details of the steel and aluminum tariffs.
“With our deep American roots and the steel and aluminum content requirements of the USMCA, Ford, GM and Stellantis purchase the vast majority of their steel and aluminum in the United States or North America,” Mr. Blunt said in a statement. “Revoking the exemption for Canada and Mexico and extending tariffs to auto parts with steel and aluminum will add significant costs for auto makers, suppliers and consumers.”
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Canada exported $11-billion worth of steel and steel-based products to the United States in 2024 and imported nearly $7-billion, according to Statistics Canada. The trade balance was much wider in aluminum, with Canada exporting more than $13.2-billion to the U.S. in 2024 and importing less than $2.5-billion.
Mr. Trump says his policy of tariffs for long-standing trading partners will bring home manufacturing, create jobs for Americans and enrich government coffers. Several industry leaders and stock market investors disagree. They point to rising inflation, the billions of dollars it costs to shift factories to the U.S., and the growing prospects of an economic recession. The Dow Jones Industrial Average has fallen by almost 7 per cent in the past 30 days.
“Somebody’s got to pay those tariffs at the end of the day, and that’s going to come in the form of increased prices for consumers and businesses and presumably increase inflation as a result of that,” Mr. Adams said. “So it’s sort of the opposite direction of where the President indicated he would be taking the economy when he was elected.”
“It’s insane,” Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, which represents dozens of Canadian suppliers, said of the chaotic trade policies emanating from Washington.
Jean-Marc Germain, CEO of car-parts maker Constellium SE, said in an e-mail that the company supports blanket tariffs on all U.S. aluminum imports. But he warned that “any disparity in tariff treatment between countries could pose substantial risk” to American manufacturers of aluminum-based products.
“In particular, if Canada faced higher tariffs than other nations, given the U.S. reliance on Canadian primary aluminum, it could expose the U.S. market to an influx of lower-cost fabricated imports,” said Mr. Germain, who is based in Baltimore, Md.
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That would ultimately harm the ability of companies such as Constellium to compete with products made outside the U.S. that are imported from countries facing a lower tariff rate.
The tariffs could end up hurting U.S. manufacturing, according to the Motor & Equipment Manufacturers Association. In a statement, MEMA said the tariffs “will impose significant cost pressures and supply chain challenges that may affect the industry’s long-term competitiveness.”
The imposition of 25-per-cent tariffs, the statement said, “will add complexity and financial strain, potentially limiting investment in domestic production and innovation.”
In a survey MEMA conducted last week of 139 of its members, 78 per cent of respondents said they do not have excess capacity available in the U.S. to domestically manufacture parts that are currently sourced globally.
Canada plans to impose retaliatory tariffs of $29.8 billion.
The Associated Press