The hike in costs due to blanket U.S. tariffs impacting auto parts profitability could put a stall in shipments and soon lead to plant closures on both sides of the border, says the president of the Automotive Parts Manufacturers’ Association (APMA).
Volpe said the industry should be prepared for automotive production across Ontario and Quebec as well as several U.S. states “to go to 2020 pandemic-level idling” and temporary layoffs within the week.
He told CP24 the industry is prepared for the tariffs “in so much as you can be prepared for a punch that you know is coming to your face.”
“If those tariffs come in on cars what we learned in 2020 when the pandemic hit and in 2022 when the Ambassador Bridge was closed is you can’t make the cars without all the parts,” Volpe said during the March 3 interview.
“So, if you are making 6 or 7 percent [profit] and your customer says you have to pay a 25 percent surtax on what you are shipping, you are not going to ship. And if you don’t ship it, there isn’t an alternative. [Manufacturers] can’t go buy a crankshaft or car seats at a Walmart. So, the industry, like it did in those first two incidents, will close within a week, and that includes Ontario and Michigan all the way down to Kentucky, Alabama and Texas.”
Ontario Premier Doug Ford has pledged to support laid-off workers during the Canada-U.S. trade war.
A key part of that is the $5 billion Protect Ontario Account which his Progressive Conservative party has described as a bid to help “large-scale industrial job creators” tackle operational and supply chain challenges as well as restructure and re-tool to find new customers and keep workers employed.
Tariff War
As U.S. tariffs were activated at midnight, so too were Canadian counter-tariffs amounting to 25 percent on $155 billion of American goods. The retaliatory tariffs start on $30 billion worth of goods immediately, and the remaining $125 billion in 21 days’ time.Prime Minister Justin Trudeau had vowed that Ottawa would respond with tariffs on American goods as soon as the U.S. imposed 25 percent tariffs on Canadian exports and 10 percent tariffs on Canadian energy.
“Our tariffs will remain in place until the U.S. trade action is withdrawn, and should U.S. tariffs not cease, we are in active and ongoing discussions with provinces and territories to pursue several non-tariff measures,” Trudeau said in a March 3 statement.
“While we urge the U.S. administration to reconsider their tariffs, Canada remains firm in standing up for our economy, our jobs, our workers, and for a fair deal.”
Canadian industry and politicians had been hoping Ottawa’s border security measures would be enough to placate the American president. But hopes for a last-minute reprieve were quashed when the president told reporters at a March 3 White House event there was “no room left for Mexico or for Canada” to avoid them.
The White House had previously threatened to put 25 percent tariffs on Canadian-made goods sold in the U.S. last month, but Trump paused the tax for one month after Trudeau promised to beef up border security and crack down on cross-border fentanyl trafficking.
Trump said the tariffs would not be implemented March 4 if Canadian measures aligned with his expectations, but in recent days indicated Canada has not done enough to stop the flow of drugs across the border.
Trudeau has argued that Canada has been proactive in its efforts to tackle fentanyl trafficking, adding that less than 1 percent of the fentanyl intercepted at the U.S. border comes from Canada.
