US President Donald Trump’s threat of tariffs on steel and aluminum imports from Canada has sent shockwaves through the automotive industry, posing significant risks to the trade ties between the two countries. The proposed tariffs could lead to a return to pre-1975 trade agreements that saw Canadian manufacturers producing fewer models for US markets.
Automakers have expressed concerns over the potential impact of tariffs on supply chains and production costs. Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, notes that eliminating a provision called duty drawback would severely affect the auto industry’s ability to import parts without paying tariffs multiple times.
The relationship between Canada and the US is complex, with the two countries exchanging goods such as lumber, uranium, chemicals, oil, and agricultural products. Canadians also purchase items from the US, including orange juice, peanut butter, and appliances. The Canadian government has already announced plans to retaliate against US tariffs on certain products.
David Soberman, a professor of marketing at the University of Toronto, believes that tariffs would have a negative impact for both sides, even if implemented temporarily. “Canada is going to have retaliatory tariffs because Canadians will be upset about it,” he said.
Sam Abuelsamid, vice president of market research at Telemetry Insights, predicts that fully implementing US-Canada trade tariffs would lead to less importing due to economic viability concerns and higher production costs. The likelihood of layoffs and reduced production is high if the tariffs are not lifted.
The impact of these tariffs on everyday Canadians has been significant, with many expressing concern over the potential consequences for their personal finances. “It’s a gut punch to everyday people,” said Holmes of the Canadian Chamber.
As tensions between the US and Canada continue to rise, it remains to be seen whether President Trump will push forward with his proposed tariffs or if they will be scrapped altogether.
Source: https://eu.usatoday.com/story/money/2025/02/13/tariffs-us-canada-auto-industry/78469417007