Canada automotive industry It is sounding the alarm that additional tariffs would be “very disruptive” and that some automakers are expressing concern that they will be seen as “too American” in a tense climate.
This happens after US President Donald Trump abruptly interrupted trade negotiations And said it would add a 10 percent duty in addition to the current fees imposed in Canada – a move Trump said was prompted by anti-tariff commercial produced by the Ontario government.
A group of representatives from Canada's auto sector met with a federal standing committee in Ottawa on Monday to discuss the “challenging” environment created by tariffs and the trade war.
“It would be extremely difficult if more tariffs were imposed, especially if they applied to all products that are currently subject to CUSMA,” said Brian Kingston, president and CEO of the Canadian Automotive Manufacturers Association (CVMA).
“So we don't know yet how they will be applied, but an additional 10 per cent would be billions of dollars in costs for this (automotive) sector and other Canadian sectors. It's very disruptive and hopefully we can find a way out.”
Trump did not specify whether the additional tariffs would apply to all sectors or specific industries, and did not say when asked Monday when they might take effect.
Carney responded to Trump ending trade negotiations by declaring, “We cannot control the trade policies of the United States.”
Trump's tariff policy means products could face additional costs if they are not covered by the Canada-United States-Mexico Agreement (CUSMA), which formal review is scheduled for 2026.
Companies in many sectors, including automotive, are looking to find alternative trading partners and adjusting their supply chains to avoid or at least minimize the cost impact of tariffs.
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Some Car companies have warned that tariffs could hurt their profits. by billions of dollars by the end of 2025, with some production moving or closing in Canada leading to job losses.
Earlier in October, Stellantis announced that it plans to move production of the Jeep Compass. from Brampton, Ontario to Illinois in the US, threatening to eliminate thousands of jobs.
Kingston was asked Monday about job security for Brampton workers at the Stellantis plant and said “there are plans for the Brampton plant, but it's not a plant closure,” without going into detail.
General Motors also said it would stop producing its vehicles. Bright drop Vehicles in Ontario.
In light of the news about Stellantis and General Motors, Industry Minister Mélanie Joly has formed a “response group” aimed at preserving jobs.
Kingston added that there could be further plant closures and potential job cuts “the more time passes without a strong trade deal,” making Canada a “competitive” market for companies to invest.
When companies suffer from higher costs, they typically try to offset the hit to their profits by raising prices to customers. This means that companies like Stellantis may have to raise prices for car buyers due to having to pay tariffs.
“You'll see car prices go up $4,000, $12,000, $15,000 – I don't think people signed up for that. That's a potential outcome, but I ultimately think we'll find a landing zone,” Kingston said.
Hugh Williams, national spokesman for the Canadian Automobile Dealers Association, told the committee that one of his client's concerns was that “a number of our dealers, Ford, GM and Stellantis, are concerned about the side effect of being seen as 'too American.'
Recent Ipsos poll conducted exclusively for Global News revealed that six in 10 Canadians said they could never trust the US again because of Trump's policies.
Trump also repeated the rhetoric that Canada should become “51st state” to avoid paying duties.
The group was adamant that the best way to support the Canadian auto sector and its workers is to negotiate a trade agreement that would eliminate all tariffs on finished vehicles and components crossing the Canada-U.S. border.
“The best deal for Canada is where we stick to the rules that were agreed to under the previous CUSMA. If those terms are met, then that should be the basis on which we continue to implement zero tariffs on vehicles moving back and forth across the border – and that's what we need to achieve,” said David Adams, president and CEO of Global Automakers of Canada.
“I think some people say, 'That's wishful thinking.' Well, maybe that’s one of the reasons why the negotiations are taking so long, because that’s the end goal here.”
Williams also suggested it might be worth waiting for a long-term trade deal to be reached.
“We're concerned about getting a long-term deal done. Yes, we need short-term certainty, but the main challenge here is making sure we have a CUSMA deal.”
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