Ontario expects U.S. to lessen impact of auto tariffs on Canada after Lutnick phone call

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Ontario Premier Doug Ford says U.S. Commerce Secretary Howard Lutnick told him that some Canadian-made cars will face tariffs lower than President Donald Trump’s threatened 25 per cent, an assertion that the White House denied.

Speaking to reporters, Mr. Ford and provincial government sources outlined a tariff regime that appeared to differ from the one outlined in Mr. Trump’s executive orders aimed at the auto sector and issued on Wednesday – but left many unanswered questions.

Mr. Ford also said Mr. Lutnick claimed the new tariffs would not result in the closing of auto plants, something Mr. Ford said he would only believe after he speaks to Canadian auto sector CEOs himself in the coming days. The Premier, and auto industry lobbyists, have previously warned the tariffs would paralyze the North American car business.

“My response was Ronald Reagan’s response: trust but verify,” the Premier told reporters at Queen’s Park on Thursday. “We’ll see what happens over the next little while.”

Mr. Ford said Mr. Lutnick told him finished vehicles entering the United States from Canada containing 50-per-cent U.S.-made parts would face a 12.5-per-cent tariff, which is the same as a 25-per-cent tariff on the value of its non-U.S. components. That squares with the tariff rules Mr. Trump announced on Wednesday.

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But a senior Ontario government source, clarifying the Premier’s remarks, said that Mr. Lutnick also told Mr. Ford that Canadian cars with more than 50-per-cent U.S. parts would be exempt from U.S. tariffs entirely – an exemption that was not outlined in the executive order. The Globe and Mail is not identifying the source as they are not authorized to speak publicly about internal discussions.

A White House official told The Globe and Mail in an e-mail that Mr. Lutnick did not make any such assurance to Mr. Ford and reiterated Mr. Trump’s assertion that the auto tariffs as announced would be permanent. The Globe is not naming the official because they were not authorized to speak publicly.

Asked about the denial, Ford spokeswoman Ivana Yelich replied with an e-mail that did not address the contradiction but said the U.S. tariffs would harm American auto workers: “We’re confident that the U.S. administration understands the consequences that tariffs on Canada will have on the auto assembly supply chain and its workers in Michigan, Ohio, Tennessee, Alabama and everywhere in between and will act accordingly.”

The Premier said he spoke with Mr. Lutnick late Wednesday night for about 25 minutes, hours after Mr. Trump issued his orders imposing a 25-per-cent tariff on cars imported into the U.S. from countries outside the U.S.-Mexico-Canada Agreement.

Under the text of the order, cars compliant with that trade treaty would face a 25-per-cent tariff applied only to the value of their non-U.S. parts, not the entire vehicle. Car parts made in Canada would continue to cross borders under USMCA tariff-free, until the Commerce Secretary “establishes a process to apply the tariff exclusively to the value of the non-U.S. content of such automobile parts.” The measures would take effect April 2.

The Ontario Premier also said Mr. Lutnick said he did not know what further tariffs would be coming on April 2, the day Mr. Trump had set for 25-per-cent tariffs on most Canadian goods and for other tariffs on imports from countries worldwide.

“I think he has an idea. Or maybe he doesn’t,” Mr. Ford said. “That’s even scarier if he doesn’t.”

Spokespeople for Mr. Lutnick and the White House did not immediately respond to requests for comment.

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Mr. Ford said he would meet with his fellow premiers and Prime Minister Mark Carney, with whom he said he spoke on Thursday. He said the two men agree that Canada must retaliate, but not until after April 2, when the full extent of the U.S. tariffs are supposed to be unveiled.

Federal Minister of International Trade Dominic LeBlanc also spoke to Mr. Lutnick on Wednesday, according to a source with knowledge of the phone call. The Globe is not identifying the source as they are not authorized to publicly disclose details of the call.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturing Association, said Mr. Lutnick and other U.S. officials appear to be scrambling to revise White House tariff policies.

He also warned that even an exemption for Canadian cars with more than 50-per-cent U.S. content would not save the auto business, because while many cars assembled in Ontario have close to that number, “almost none” surpass it.

”That sounds like a concession, but it’s impractical,” Mr. Volpe said, adding that 12.5-per-cent tariffs on most Canadian-made cars and auto parts would result in the shutting down of auto plants on both sides of the border.