By on July 20, 2018

FCA Brampton Assembly Line Challenger & 300 - Image: FCA

The thought of the U.S. imposing an import tax on Canadian vehicles and auto parts was once unthinkable, but the possibility now exists. Unable to ignore it any longer, Canada now says it will impose tariffs on American-built vehicles should the U.S. act first.

Canada’s contribution to the continent’s automotive landscape isn’t what it once was, but it’s still formidable when viewed in isolation. The Great White North, which continued building Studebakers for two models years after South Bend went dark, houses assembly plants operated by the Detroit Three, Honda, and Toyota.

With the glaring exception of pickup trucks, Canada would find itself with a (limited) crop of remarkably practical tariff-free vehicles if the taxes went into effect.

“Should this investigation ultimately result in the application of tariffs on autos, Canada will once again be forced to respond in a proportional manner,” said Kirsten Hillman, Canada’s deputy ambassador to the U.S., in a statement made at Thursday’s Commerce Department hearings.

“Maintaining open trade in autos and auto parts between our countries is crucial to the economic well-being of our companies, our communities and our workers, which, in turn, supports our collective security. We urge you to reflect on these matters as you prepare your recommendations.”

As we told you yesterday, automakers and industry groups have come out against the possibility of auto tariffs levied in response to a perceived national security threat. There’s just too much that goes into building a car. Even domestic automakers stand to see price increases on U.S.-made vehicles should the U.S. impose tariffs, which could run as high as 25 percent.

Hillman said it doesn’t make sense that Canada’s automotive landscape could pose any threat to the United States. She added that in the event of war or an attack, U.S. planners have always looked at Canada as a source of reserve capacity.

cami assembly factory

Over 50 percent of vehicles purchased in the U.S. are made in the U.S., either by domestic manufacturers or the plethora of foreign companies operating on American soil. In contrast, only 11 percent of U.S.-bought vehicles are built in Canada. While the country north of the border would get the short end of the stick, no one would come away unscathed. Suppliers like Magna International, headquartered near Toronto, stand to be hard hit as well, but so too would the companies using its products. Then there’s the engines, transmissions, and other components manufactured by OEMs on the Canadian side of the water.

The saber-rattling might end up being a big bluff, and the Canadian contingent no doubt hopes it is. Canadians get the majority of their vehicles form the United States.

Currently, Ford builds the Ford Flex, Edge, Lincoln MKX, and MKT in Oakville, Ontario. General Motors builds the Chevrolet Equinox at the CAMI plant in Ingersoll, Ontario, but it also builds it in Mexico. That plant lost the GMC Terrain when production of the second-generation model moved south of the Rio Grande. In Oshawa, GM builds the Cadillac XTS and Chevrolet Impala, but the former model isn’t long for this world and the latter is also built at Detroit-Hamtramck. Oshawa also performs final assembly of the outgoing generation of Chevrolet Silverado and GMC Sierra light-duty pickups.

No such country-of-origin variety for FCA, though. Its Windsor, Ontario plant is the sole builder of the Chrysler Pacifica and Dodge Grand Caravan, and its Brampton facility cranks out Chrysler 300s, Dodge Chargers and Challengers under a fluttering red maple leaf.

North American Toyota RAV4 production calls Canada home, and a portion of the continent’s Corollas can claim the same — though not for long. The automaker plans to move all Corolla sedan production to a new joint Toyota-Mazda facility in Alabama in a few years’ time. Also Canadian-made are the RX350 and RX450h crossovers. (Japan builds them, too, but it’s hard to imagine an auto import tax that impacts Canada but not Japan. The same sentiment goes for Mexico.)

Honda builds its biggest breadwinners, the Civic and CR-V, at the automaker’s two Alliston, Ontario assembly plants, but you’ll also find them built in the States.

[Source: CBC] [Image: Fiat Chrysler Automobiles, General Motors]

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29 Comments on “Battle on the Border: We’ll Fire Back If You Pull the Trigger, Canada Tells U.S....”

  • avatar

    We should probably take this very seriously. Canada has amassed 80% of their population within 100 miles of the US Border. They are years ahead of us in Zamboni technology!

  • avatar

    Canada is hit hard by the unfortunate and bizarre political situation on our side. They would be wise to initiate closer economic ties to more reliable countries with fact-driven, predictable and more conventional political leadership, such as the EU, Mexico and Japan, and possibly China.

    • 0 avatar
      Peter Gazis

      The Japanese don’t buy any Canadian made vehicles.

    • 0 avatar

      So the way it seems to be going is even though I live in Canada, the RAV4 will become more expensive. It’s made a couple of hours away but uses parts from the US which will now be taxed in retribution by the feds. So domestics go up in price and an import(i.e. Mazda CX-5) which is made strictly in Japan will stay the same. No government can/will allow that. To level the playing field, Canada will need to add tariffs to all imports. Life is going to get really expensive kids

  • avatar

    I’m sure Asia and Europe have more than enough auto production capacity to make up for U.S. production, should the U.S. decide to tariff Canadian-made vehicles and Canada reciprocates (the latter of which is a certainty, should the former occur). The U.S. is certainly being sure these days to remind Canada that it’s a foreign country from the U.S.’s perspective, and so Canadians should absolutely consider the reverse to be the case as well.

  • avatar

    I think that light duty Kenworth, and Western Star trucks are built in Canada so that solves the trade war shortage of coal rollin’ bro-dozers.

  • avatar
    Gardiner Westbound

    NAFTA was a huge error for Canada. Talks directed to securing reliable trade partners are underway with the UK, EEC, Japan and China. The change will be wrenching but positive in the long run.

    • 0 avatar

      “Talks directed to securing reliable trade partners are underway with the UK, EEC, Japan and China”

      Where have you been? There are no talks with the UK or “EEC”, whatever that may be. There is CETA, which has been negotiated and is in the ratification process. There is also TPP, which Canada and 10 other Pacific Rim countries (including Japan) have signed, and is also going through the ratification process, so there are no “talks” with Japan itself.

      And NAFTA has been beneficial to all 3 signatories, since you ask. Which is typically the result of free trade agreements that actually get implemented.

  • avatar

    @ site admins

    Can you please fix this f$%^&# site! It doesn’t refresh when doing a Reload or clicking on “Home”. Shows pages dated by July 19.

  • avatar
    Tele Vision

    The real joke is that The Flailing ManBaby wants to implement these idiotic measures due to Trrrizm!

  • avatar

    None of Trump’s actions are for anything other than for him to tout what he sees as a ‘win.’ It matters not at whose expense or the reasons why, winning is winning for him, even when it’s losing.

  • avatar

    The 51st state right behind South Dakota

  • avatar

    Residents of Moose Jaw are pissed! A militia was formed, dynamite gathered and lobbed over the border targeting the fine residents of Havre, Mt. Finding the sticks lying in a wheat field, a six-pack of beer was obtained and the dynamite was returned up north with the fuses lit.

  • avatar

    Of course, the incredible amount of uncertainty that the US has put in place for the car industry that crosses the US-Canadian border is in itself an unfair trade barrier.

  • avatar
    Big Al from Oz

    Where is TW5?

    Where is Sub600?

    “Canada is not nice to America”.

    “I like Justine, me and him get along fine”.

    By Donnie Banana Trump.

    I suppose its those terrible American companies manufacturing in Canada and around the world taking those American jobs …… when America is at full employment. Go figure.

  • avatar
    Brian Ghilliotti

    Imagine the opportunity for organized crime factions along the Canadian border to smuggle auto related materials in order to bypass export / import control regimes established by these tariffs? If organized crime can smuggle goods that can be sold by passing the trade tariffs, and they can offer these goods at potentially lower prices, they will try. Do these tariffs impact used cars and car parts sold across the border? Brian Ghilliotti

  • avatar
    Carroll Prescott

    Solution is easy – for every Canadian built vehicle we import, we give them a Southern border invading family complete with all the children the invading parents can carry. This keeps the families together and removes the blight of people who don’t belong here and are breaking our laws the moment they set foot here. And we could give them all the folks who are leaving their countries because of violence. Canadians are many things, but they are always sorry for whatever it is they’ve done.

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