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Impact of U.S.-Canada Trade Tariffs on the Auto Care Sector

Autosphere » Mechanical » Impact of U.S.-Canada Trade Tariffs on the Auto Care Sector
Credit : Steve Pawlett

If implemented, these measures could be devastating for the industry.

Since Donald Trump was elected President of the United States on January 20th it has been a very interesting time for Canada-U.S. relations. On February 1, President Trump announced a 25% on all Canadian and Mexican exports to the U.S., set to commence on February 4. Additionally, a 10% tariff on energy exports from Canada to the U.S. was slated to come in on February 4th

Counter tariffs

In response, Canadian Prime Minister Justin Trudeau announced that Canada would implementing 25% retaliatory tariffs on $155 billion worth of U.S. imports, starting on February 4th with $30 billion in goods, followed by another $125 billion in 21 days’ time.

At the 11th hour, on February 3 however, Canada and Mexico, following discussions with the U.S. administration, were able to stave off the impending tariffs, at least for the next 30 days, by announcing plans to bolster border security and tackle the flow of illegal migrants and fentanyl, two major reasons why President Trump said he was planning to implement the tariffs.

For the automotive industry which is heavily integrated between Canada, the U.S. and Mexico, these tariffs and counter tariffs would have created a huge problem, significantly raising costs on parts and vehicle manufacturing, as well as disrupting supply chains and potentially severely limiting parts and vehicle availability, not to mention cratering consumer demand for cars, parts and related services.

Major implications

Flavio Volpe, President of the Canadian Automotive Parts Manufacturer’s association said that with 25 percent tariffs imposed, the auto sector would shut down within a week, while Ontario Premier Doug Ford said that as many as 500,000 jobs could be lost in the province alone if the tariffs were implemented.   

While the threat has subsided for now, it has not been eliminated. On February 3, the Automotive Industries Association of Canada (AIA Canada), which represents the interests of the aftermarket auto care sector in Canada, issued a statement saying, “we stand in support of the countless Canadian industries [that could be] impacted by these tariffs and will keep our members informed of any new concerns for the auto care sector as they arise.”

The Association is actively involved with officials at the Government of Canada’s Finance and Innovation, Science and Economic Development (ISED) and continues to monitor developments as they unfold. AIA Canada is also encouraging its members to reach out to the association and share how these potential tariffs could affect them, in order to provide the most timely and relevant information. For other details, members can reach out to Emily Holtby, AIA Canada’s Vice President of Government Relations at [email protected])

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