Executives in Canada’s auto industry have planned for a Donald Trump presidency, says the head of the Automotive Parts Manufacturing Association (APMA).
That’s because the Republican candidate who narrowly defeated Democrat Hillary Clinton in Tuesday’s election, has vowed to “terminate” the North American Free Trade Agreement.
“The trade policies of Hillary Clinton, from NAFTA to China to Korea to the Trans-Pacific Partnership – which by the way is a disaster – have raided your factories, crushed your auto industry and gutted your communities,” Trump said in Grand Rapids, Mich., early on Election Day, Nov. 8.
He’s a president-elect determined to bolster America’s auto sector by tearing up trade deals and refusing to sign new ones.
As the vote grew closer, the auto industry started planning, APMA President Flavio Volpe said.
“People were starting to model what it would look like if a Trump victory meant a new look at NAFTA,” Volpe told Automotive News Canada, Nov. 9. “I think everyone was prudently saying, ‘If he wins, what does it mean for us?’
“I heard that in Washington, D.C. when we went there [in September] and we met with Congressional leaders and manufacturing leaders. I heard that in Detroit.
“And I certainly heard it up and down Highway 401 on this side of the border.”
Congress also plays role
But one observer says trade relations between Canada and the United States are on solid ground despite Trump’s election bluster.
Tony Faria, Co-Director of the Office of Automotive and Vehicle Research at the University of Windsor isn’t sure Trump will be able to renegotiate NAFTA, let alone terminate it.
“Any NAFTA participant can certainly call for discussions to make changes. But, one person, such as the president of the United States, cannot do it on his own. That would have to go through Congress,” Faria said. “Trump can say whatever he wants in terms of wiping out trade agreements and tacking on tariffs but that’s not his decision alone.”
The Trans Pacific Partnership is another story all together.
It’s a trade deal — not yet ratified — designed to open the Pacific Rim’s market to North American business.
Trump said he wouldn’t approve it.
“He will have a say in trade agreements going forward in the U.S.,” Faria said, “but in terms of what’s in place, I don’t see changes taking place.”
Trump has also promised to tax cars imported from Mexico, a country that continues to see major investment from domestic and foreign automakers.
That could bode well for Ontario if its partnerships with states like Michigan remain strong, Volpe said.
An estimated 30 per cent of the parts used in Michigan assembly plants alone are Canadian made, Volpe previously told Automotive News Canada.
Fluid border imperative
“You can’t take for granted who may or may not advise the president,” Volpe said, “but certainly Michigan’s Congress representatives and Senate representatives will be able to very quickly state how important it is that the border stays fluid and those [Canadian] relationships don’t get disrupted.
“If we’re successful in doing that, I think Ontario and Canada is in a relatively better position than any number of Mexican states.”
Volpe said “a deep dive and debate on what NAFTA 2.0 looks like” is likely now that Trump won the presidency.
“I imagine there will be some compromises before they crystallize their position on NAFTA,” he said. “If the Republican Congress thinks pulling out of NAFTA is a bad thing, and assuming that’s where he wants to go, they have the ability within their jurisdiction, to put a fence around him.”