‘We don’t lose’: Auto parts industry weighs proposed U.S. content requirement

A general view of the production line is shown during a tour of a Honda manufacturing plant in Alliston, Ont., Wednesday, Apr. 5, 2023.

Trade talks between the United States and Mexico are now officially underway, as the two sides held a first round of bilateral negotiations to review the Canada-U.S-Mexico agreement, on Friday.

Canada however, has not entered into negotiations with Washington yet, and was not part of Friday’s talks.

The U.S. Trade Representative’s office says “automotive rules of origin, steel and aluminum, and economic security” were priorities in a first round of talks with Mexico.

Reuters reported that Trump’s negotiation team set out clear new expectations for the auto sector: that North American vehicles would need to contain at least 50 per cent American content.

• READ MORE: Trump administration wants to raise North American auto content to 82%, with half from U.S.
• READ MOLRE: U.S., Mexico launch formal trade talks, Canada not included

The news offers a first potential window for Canada into what it could expect in upcoming talks.

“It is a very steep departure from ‘we don’t want cars from Canada,’” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association and a member of Prime Minister Mark Carney’s advisory committee on Canada-U.S. economic relations, in an interview with CTV News Saturday.

“We’ve heard the president especially say he doesn’t want Canadian cars, and we’ve heard Jamieson Greer, up until last week, saying ‘we don’t see a path forward.’ This is a path forward.“

• READ MORE: Canada in ‘different spot’ when it comes to Trump tariffs, U.S. trade czar says

Volpe says the industry would not want to agree to 50 per cent as a ‘minimum floor’ when it comes to rules of origin, but says Canadian vehicles already include a significant amount of American content.

• READ MORE: PM Carney to pitch Canada to CEOs, investors ahead of CUSMA review period

“The percentage of American content in vehicles made in Canada has gone up from 38 per cent in 2019, the last year of the NAFTA rules, to 50 per cent in 2024. So we know that there is a workable path forward here,” said Volpe.

“Canada is the biggest destination for American auto parts anywhere in the world, and it’s not close: $29 billion worth of auto parts a year. So the Americans can say that this proposal is one that supports their industry. If it happens to work for ours, it’s a bonus, but they’re really looking after their auto parts sector here.”

Volpe also pointed out that parts that come from U.S. auto plants could be coming from Canadian car companies.

“There are 176 Canadian-owned parts factories in 23 U.S. states that employ 48,000 Americans,” he said.

“We don’t lose if there’s a requirement to have American parts, we should negotiate, but some of those American parts are Canadian companies’ parts.”