Any new tariffs on car and truck imports to the United States are being described by Canadian automotive associations as “not smart” and “heavy-handed.”
The Trump administration on Wednesday launched a national security investigation into such imports that could lead to new U.S. tariffs — suggested to be as high as 25 per cent — and similar to those imposed on imported steel and aluminum in March.
The national security probe under Section 232 of the Trade Expansion Act of 1962 would investigate whether vehicle and parts imports were threatening the industry's health and ability to research and develop new, advanced technologies, the Commerce Department said on Wednesday.
"There is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry," Commerce Secretary Wilbur Ross said in a statement, promising a "thorough, fair and transparent investigation."
The majority of vehicles sold in the United States by Japanese and South Korean automakers are produced there, but most firms also export to the U.S. from plants in Asia, Mexico, Canada and other countries.
Roughly 12 million cars and trucks were produced in the United States last year, while the country imported 8.3 million vehicles worth US$192 billion. This included 2.4 million from Mexico, 1.8 million from Canada, 1.7 million from Japan, 930,000 from South Korea and 500,000 from Germany, according to U.S. government statistics.
Automotive News Canada reached out to a number of associations and organizations representing automakers and parts suppliers in Canada.
Here’s what they had to say about the investigation.
David Adams — president of the Global Automakers of Canada
From our perspective we believe that any such action can only hurt American consumers who, if the proposed tariff measures are confirmed based on imported vehicles determined to be a threat to national security, will have to pay 25 per cent more for the imported vehicle they desire to purchase.
It is also unclear how broad or targeted any such measure could possibly be.
The fact of the matter remains that the two top jurisdictions that the U.S. imports vehicles from are Mexico and Canada, so it is unclear what to read into this action.
Flavio Volpe — president of the Automotive Parts Manufacturers Association
Over 50 per cent of Canadian-built cars are made by American OEMs containing 60 per cent American content — 85 per cent of [those vehicles] are sold to American customers. Potential Section 232 tariffs on Canadian cars will punish American companies, suppliers and customers. This is not smart.
David Worts — executive director of the Japan Automobile Manufacturers Association of Canada
1. As with steel and aluminium, auto exports from Canada are not a national security threat to the U.S.
2. The threat of a 232 action and a 25 per cent import tariff appears to be a heavy-handed negotiating tactic in the context of the unresolved and continuing NAFTA negotiations.
Jerry Dias — president of Unifor
As a trusted trading partner I think it’s clear that Canada is not a threat to American security. What’s unclear is the motivation or the actual target of potential tariffs. Is this a NAFTA bargaining tactic or is Trump just using Section 232 as a political tool to deliver one of his so-called ‘wins’ in the absence of a new NAFTA prior to the U.S. midterm elections?
There are serious issues, including tariffs, which need to be addressed to rebalance North American auto trade in the international market but the shotgun approach of Section 232 could cause chaos in the sector and inflict severe collateral damage to both Canadian and American auto workers.
Reuters contributed to this report.