By on September 27, 2018

Man, if you live south of the 49th parallel, you missed quite a hubbub yesterday evening. Actually, Americans likely caught a whiff of it, as U.S. President Donald Trump’s lengthy post-UN press conference Wednesday covered a lot of topics, including the one that had Canucks up in arms.

Up here in the Great White North, a country some commenters would prefer to never see mentioned (as this writer apparently mentions it ALL THE TIME), trade remains an understandably hot topic. Canada hasn’t reached a renegotiated free trade agreement with the U.S., unlike Mexico, and there’s a Sunday deadline looming to sign on to the U.S.-Mexico accord. Tick tock. Among other planks, Canada wants to protect its dairy cartel — an entity not universally loved up here, as it greatly increases the price of common food staples on store shelves. However, protecting jobs in that sector means risking jobs in the larger auto sector, a crucial industry whose vehicles Trump has threatened to tax to the tune of perhaps 25 percent. Auto parts could see a 10 percent tariff.

Canada exported $48.8 billion worth of vehicles in 2016.

Toyota, Honda, and the Detroit Three all have assembly plants in Ontario. Last night’s news conference brought nothing but worry to the nearly 200,000 people employed in the vehicle and parts manufacturing sector. What would it mean if Trump pulls the tariff trigger? And is Canada blameless in not yet reaching a deal?

First, Trump’s comments from last night.

The president said he turned down a one-on-one meeting with Canadian Prime Minister Justin Trudeau “because his tariffs are too high and he doesn’t seem to want to move — and I told him, ‘Forget about it.’”

“We’re very unhappy with the negotiations and the negotiating style of Canada — we don’t like their representative very much,” Trump added, referring (it seems) to Foreign Affairs Minister Chrystia Freeland, who heads Canada’s negotiating team. “We are not getting along with their negotiators. Canada has treated us very badly.”

Trudeau’s office claims the request for a meeting never happened, but wouldn’t comment on the matter further. The National Post cites a source claiming Trump’s son-in-law, Jared Kushner, attempted to bring the two leaders together.

FCA Brampton Assembly Line Challenger & 300 - Image: FCA

During Trump’s presser, the issue of protectionist measures in his neighbor’s dairy sector once again came up as a sticking point. It looks like neither side is willing to budge. According to government data, Canada’s dairy sector employs 22,904 in the manufacturing sector and 18,805 in the farming sector (2016 figures)

The same source states that the country’s auto sector employs 140,404 workers directly, with another 51,923 in the parts sector.

“If Canada doesn’t make a deal with us, we’re going to make a much better deal,” Trump said Wednesday. “We’re going to tax the cars that come in.”

According to U.S. firm Trade Partnership Worldwide, an import tax of 25 percent would increase the cost of a $30,000 Canadian-built vehicle in the U.S. by roughly $6,500. Think of that markup applied to a Toyota RAV4 or Dodge Grand Caravan. Or Dodge Challenger or Charger. Or Chrysler Pacifica. Or Honda Civic or CR-V. Or Ford Edge. Or Chevrolet Equinox. Or Lincoln MKX. And so on.

All built in Canada, they are. But Americans have the luxury of choice, and the majority of available vehicles roll in from factories (of both domestic and foreign OEMs) in the U.S. and Mexico. There’s already a trade deal between the U.S. and South Korea, so Kia and Hyundai and some wee little GM vehicles are covered. Europe and Japan? That’s a work in progress; talks remain ongoing (or, in the case of Japan, are poised to begin).

FCA Windsor minivan assembly Dodge Grand Caravan 2011 - Image: FCA

Should Canada retaliate with an identical tariff on U.S.-built vehicles, the markup would amount to roughly $5,000 on a $40,000 vehicle sold in Canada, according to DesRosiers Automotive Consultants.

The potential impact to Canadian jobs ranges from awful to catastrophic, depending on who you ask. The Canadian Automotive Dealers Association predicts 100,000 jobs in the manufacturing sector would be immediately at risk, with losses from dealerships bringing that number higher. Perhaps 30,000 higher.

“These figures aren’t alarmist, they are the reality that we face,” CADA economist Michael Hatch said in June.

In 2015, 28.1 percent of Ontario’s exports came from the auto sector, housed entirely within the borders of country’s most populous province. Obviously, an import tariff on auto parts would amount to an economic bomb lobbed southward across the Detroit River. It’s imperative that tariffs be avoided. Never mind the rah-rah-let’s-go-Canada-you-show-that-meanie-Trump rhetoric I hear and read up here. Neither this writer nor any autoworker in Windsor cares whether signing a less-than-ideal agreement or walking away from the table makes Trump or Trudeau look good. Those are just two jobs. Public sector, too!

Without being at the negotiating table, it’s hard to tell how much give-and-take has taken place. It’s impossible to gauge which side is being more unreasonable, or how much a less-than-favorable deal struck between Canada and the U.S. might harm the economy. Far less than an auto tariff, undoubtedly.

cami assembly factory

The political side of this is frustrating. Some on the right claim Canada’s dragging its feet strategically, as running against Trump, not his Canadian opponent, could benefit Trudeau in next year’s election. On the left, there’s those who just want to see their guy hammer Trump with right-on barbs (and who believe we’d be fine trading within the borders of our one-tenth as populous nation), never mind the unemployed workers. Well, ninety-five percent of Canadian-built vehicles are shipped to the U.S., so they’d better pony up and buy 10 come trade-in time.

It doesn’t help that Trump’s apparent dislike of Freeland could — could — stem, in part, from her participation in a Woman In the World panel discussion held in Toronto earlier this month. The panel, titled Taking On the Tyrant, lumped Trump in with people like Syria’s Bashar al-Assad. Critics of the appearance feel that Canada’s chief trade negotiator might have decided against appearing on that particular panel in the midst of NAFTA talks, thus waiving a giant red flag in Trump’s face. White House sources told the Toronto Sun that this seriously pissed off staff, but hey, Trudeau supported it. The appearance burnished the party’s carefully crafted brand.

Meanwhile, the clock continues ticking down to Sunday.

[Sources: Global News, CTV] [Images: Fiat Chrysler Automobiles, General Motors]

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28 Comments on “Amid Cross-border Feud, a Pricier Dodge Challenger Looks More Likely Than Ever...”

  • avatar

    Clearly Canadian auto production is not a US national security threat. There has been an integrated auto manufacturing market since the Autopact came into effect 50+ years ago, and many Canadian plants are owned by US parent companies.

    Congress is making a mistake by not closing this loophole which allows the president to abuse his Section 232 powers, enacting tariffs on the basis of national security without congressional approval.

    • 0 avatar

      Exactly. And in so doing, America would get their democracy back.

    • 0 avatar
      Big Al from Oz

      The US choose it’s Presidential system to move away from the “tyranny” of having the Blue Blood having too much input into how a country runs.

      It seems the US screwed up by giving the President too much power. It has worked relatively okay for the US up until now. I suppose no one ever consider there were enough dimwits in the US to vote for a moron.

      • 0 avatar

        Dimwits are easy to come by when its by design.

        The US is geared more or less to produce two types of people depending on how far they can afford or choose to go.

        The K12 crowd are essentially trained to be worker bees – don’t ask questions, don’t consider your lot in life, confrom and do as your told and everything will work out.The advanced education guys get the benefit of being exposed to critical thinking since those guys are supposed to be the movers and shakers as well as eventually rising to leadership roles.

        You’ve got outliers on both sides of course but politicians have been able to use that system to devastating effect obviously since the days of getting out of school, getting a job in say manufacturing and working until a person qualifies for a defined benefit plan are all but over.

  • avatar

    You are assuming he is serious AND intends to enforce high tariffs over the long term.

    It s a big stick being used to change policy. After it goes in to force, Canada will wake up or see that vital industry disappear.

    • 0 avatar

      You know, 40,000 Canadians served in the Iraq and Afghanistan wars over 12 years.

      And we repay them by needlessly threatening their economic well being, and treating them like an enemy.

      Maybe the next time we need them to attack a country that attacked us, they’ll bring this stupid ham-fisted nonsense up, and tell us politely to take our big stick and put it in the president’s big mouth.

      • 0 avatar

        Canada has some nuclear options so to speak – I cant remember where I read it but the two that really stood out to me were the amount of electricity that Canada exports to the US especially the upper Northeast. They don’t have to supply it cheaply if at all (like Master/Blaster they can shut it off and cripple industry up north) and they currently aren’t obligated to observe patent law due to the renegotiation of NAFTA (iirc) and since there are quite a few drugs coming out of Canada they can just say screw it and produce generics at a much cheaper price and there was another good point that I read but it escapes me.

        Ergo, Canada is not without some big barrel recourse if things get pretty nasty but Trump being Trump I’m sure he has no qalms about entertainig the idea of invading Canada and annexing it.

        • 0 avatar

          As a Canadian, I’m not at all worried about the elimination of NAFTA.
          Full disclosure, I’m about as far right wing as they come, so spare me the Liberal insults…
          NAFTA was negotiated by America for America. Access to cheap Mexican labour, access to cheap Canadian resources. If we start selling America a resource, we can’t stop under NAFTA rules. With profit and control flowing to American companies.
          If NAFTA collapses, we can bring high tech manufacturing back into Canada or source from Japan/EU/China. I deal with high pressure valves and such. No problem, just a bit higher price and perhaps longer delivery.
          Canada is the worlds second largest country with the population of California. We will do ok. I guess we will drive more Audi’s, BMW’s, and Honda/Toyotas with a VIN that starts with J.

          • 0 avatar

            Letting NAFTA expire instead of agreeing to a bad deal for Canada seems reasonable, at least until cooler heads prevail and a win-win deal can be reached. The problem is that Trump is now using extortion through threat of tariffs to make “no deal” not an option.

      • 0 avatar


      • 0 avatar
        Mike Beranek

        “Maybe the next time we need them to attack a country that attacked us…”
        Uh, weren’t you paying attention 13 years ago? Neither Iraq nor Afghanistan attacked the United States, not on 9/11 or any other day.
        We attacked them. Illegally, by the way.

    • 0 avatar

      “Do what I want or I’ll crush you!” is such a nuanced negotiating strategy.

      And all this over what? US/Canada trade was already fair and balanced under the old NAFTA based on trade surpluses and deficits. The imbalance is within +/-3% of the total dollar value of trade, and the direction could be either way depending on how certain things are accounted for.

    • 0 avatar

      Curious. I’ve been hearing for the past two years from Trump and his supporters that other countries are taking advantage of us and getting rich at our expense because they have trade surpluses with us. Now we’re attacking Canada and threatening trade with them, though we have a trade surplus with them. Doesn’t that same logic mean that, by harming US-Canadian trade, we’d be impoverishing ourselves?

      • 0 avatar

        The US has a trade surplus with Canada in services, not goods. But the reason for that deficit in goods is the US buys 20% of its oil from Canada. If the US just stopped buying oil from Canada, trade deficit goes away.

        Canada exports a lot of vehicles to the US. But they also import just as many from the US. Putting tariffs on each others vehicles is not a very good idea.

        • 0 avatar

          I’m unclear on why you draw a distinction between goods and services. If I make money for selling a service, that money is legal tender just like money I’d make for selling goods.

    • 0 avatar
      Big Al from Oz

      I do believe the US will come out of Trump’s global trade war worse off.

      The US so far is the only country so far that is reneging on it commitments it had made. The rest of “us” globally are doing business pretty much as normal.

      I hear the Chinese have on trump card (pun intended) up their sleeves that will really p!ss of Trump. The Chinese will be reducing tariffs and controls on imports into China for most countries ………… except the US. The Chinese are doing this to maintain their growth.

      Even after the Trump the US will take years to recover and gain the respect it once had with it’s Allies and friends.

      The Canadians will move slowly away from being so reliant on the US.

      It’s a pity the future for the US, it could of been so much better.

  • avatar

    Spoiler alert, Trump is terrible at this.

    Turns out negotiating trade is a lot harder than putting your name on low quality steaks sold it Sharper Image. It’s also embarrassing to the U.S. that our world leader has a smaller package than just about any Western leader at the table, and his probably doesn’t even work. It absolutely matters that he lacks the confidence to negotiate long-term and hold out.

    • 0 avatar

      Drumpf thinks that his MO of bullying/bloviating works when it comes to things like international trade.

      Even for his private ventures, only worked against those who were too weak to fight back (i.e. – small contractors/businesses which have continually gotten screwed over).

      But against those w/ power/$$, Drumpf has repeatedly failed.

      For example, Drumpf couldn’t keep up w/ the loan payments on a parcel of land on the Upper West Side of Manhattan.

      So Drumpf had to sell – which he did to a group of wealthy HK businessmen.

      They left Drumpf a small stake and kept him for marketing purposes.

      After the parcel of land was developed and became very successful, Drumpf felt that he didn’t get enough out of the deal (so much for the “master negotiator) and sued.

      Of course, the lawsuit went nowhere (another of Drumpf’s MO’s is to sue, or at least threaten to sue).

      Years later, when Drumpf finally realized that getting into the action in H/K and China could be immensely profitable, Drumpf tried to get back into the good graces of the HK tycoons.

      They laughed in his face.

  • avatar

    Canada is our enemy.
    We have always been at war with Canada my brother.

    North Korea is our ally.
    We’ve always been at peace with North Korea my brother.

  • avatar

    LX is going away.

    Chrysler 300 is being executed in 2020, that leaves the Challenger/Charger – and they won’t survive this knee to the groin. The mainstream models don’t have the profit margin (higher trims/performance models certainly do, but the volume isn’t there).

    Ya, tell me I’m wrong here and how awesome amazeballs LX is and how building them is actually free because the development was done close to two-decades ago.

    • 0 avatar

      You are correct. A $6500 price increase will kill the LX.

      *Without* a $6500 price increase I think FCA will keep building them until government regulations force a too costly overhaul (a la Panther).

      However, in general, I don’t understand your vendetta against the LX platform. A lot of your comments about it seem to cheer lead its death. Yes, it’s old and fleet-heavy these days but it has its niche and seems to still be capable of making money for its manufacturer (at least for now). With sales in the large car segment contracting so much why spend a bunch of money on an all-new vehicle that very likely won’t sell in much greater volume or at higher prices?

  • avatar

    Meh, so the Bank of Canada lets the loonie drop 10-15% to where it was around 2002. Slap a reciprocal tariff on cars made in the USA and use the proceeds to subsidize Canadian factories. Trade wars are dumb.

    • 0 avatar

      I wouldn’t tariff cars. Wouldn’t want to punish the auto sector even more. Canada is the US largest export market for agriculture ($24 billion in 2017). Seems like a good place to start applying reciprocal tariffs.

  • avatar
    Big Al from Oz

    Maybe the Canadians would be better off without the massive amounts of tax payer dollars dumped into the local auto industry, especially Ontario.

    It’s well and good to say it creates jobs, but at what cost?

    Having an auto industry doesn’t make a country better. Having the money to buy and operate a vehicle is a better option.

    The Canadians can do as we had done in Australia, let the vehicle manufacturing nations use taxpayer money to subsidise the industry so we can get cheaper imports.

    • 0 avatar

      “The Canadians can do as we had done in Australia,…” Canada can become a Chinese mining colony?

      • 0 avatar

        Huh? I thought that mining and trade surpluses were good, but having a trade deficit with another country meant you were getting ripped off. Doesn’t that mean that Australia is winning, so much winning, given their positive trade balance with China and strong mining sector?

      • 0 avatar
        Big Al from Oz

        Sub, yes Australia has a huge trade surplus with China. I thought you would envy this, after much of your commentary.

        I think you are just an anarchist, with little substance.

  • avatar
    Add Lightness

    Canada can make any deal they want with America but it will not be worth the paper it’s printed on because America will renege on it as soon as it suites America.
    America withdraws from any international body as soon as something happens they don’t like.
    The ICC is too just for America.

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