Tariff tensions and GM cuts fuel new wave of auto sector anxiety

More anxiety is felt in the auto sector after a shift cut in Oshawa. CTV Windsor’s Sanjay Maru reports.

A new wave of auto sector anxiety is rippling through Windsor, after the union representing General Motors workers in Oshawa revealed 700 jobs will be cut this fall, just as the U.S. confirmed a partial exemption to its auto parts tariffs.

GM employees have learned the company is eliminating the third shift at the Oshawa Assembly Plant, driven by waning demand and trade uncertainty.

“It’s disappointing. To see them do this is unacceptable,” said John D’Agnolo, chair of Unifor’s National Auto Council.

“When you think about the amount of GM vehicles that we sell in Canada, we sell more GM vehicles than any other company here in Canada. Oshawa is no different than Windsor. They’ve been around a long time when it comes to the auto industry.”

The job cuts follow a flurry of developments across the North American auto sector.

Just hours before the layoffs were announced, U.S. Customs and Border Protection confirmed that auto parts complying with the Canada-United States-Mexico Agreement (CUSMA) will be exempt from a looming 25 per cent tariff.

That exemption, however, does not apply to finished vehicles, which make up the bulk of Canada’s exports to the U.S.

In Windsor, workers at the Stellantis assembly plant are bracing for another layoff next week — one the company said is not related to tariffs. But some fear it’s only a matter of time.

“You always have that in the back of your mind,” D’Agnolo said.

“You always worry about the fact that if GM is able to do this, will Stellantis do this? Will Ford do this?”

Peter Frise, a mechanical and automotive engineering professor at the University of Windsor, said the CUSMA exemption for parts offers some relief, but doesn’t resolve the broader uncertainty.

“It is a good thing for the auto sector,” he said.

“It’s really proof that the original plans of the Trump administration were just completely unworkable and would have resulted in a shutdown of the North American auto industry within a very short time.”

Trump’s tariff exemption specifically excludes knock-down kits and parts compilations.

Those systems were once used by Volvo at a now-defunct plant in Nova Scotia in the 1960s, according to Frise.

“Volvo was shipping in crates of parts to build cars,” Frise explained.

“They were assembled from kits that were all built in Europe, and I think this provision is to prevent that kind of thing from happening again.”

Flavio Volpe, president of the Automotive Parts Manufacturers Association, said about half of Canada’s $40-billion annual auto parts output qualifies under the CUSMA exemption.

But the rest, especially those tied to vehicle assembly, remain vulnerable.

“The cars that are made in plants like Oshawa, and in Windsor and in Woodstock and Cambridge — for the most part, 80 or 90 per cent of those are sold to Americans,” Volpe said.

He believes the tariffs are ultimately self-defeating.

“You might bleed out Canada and Mexico’s production,” Volpe said.

“But you’re going to bleed it out of the American companies: General Motors, Ford, Stellantis.”

Volpe warned the longer tariffs remain on finished vehicles; the more likely companies are to shift final assembly to the U.S. — creating long-term damage on both sides of the border.

“These companies aren’t charities,” he said.

“There are parts suppliers to the Oshawa plant in Michigan who will lose business. Hopefully, that starts to turn the pendulum the other way.”

Despite some relief over the CUSMA exemption, D’Agnolo is not optimistic about a full tariff reversal.

“Anybody can say, ‘I’m just going to punch you in the stomach instead of the face.’ It’s still going to hurt though,” said D’Agnolo, adding workers have already endured enough from the 2008 recession to COVID-19.

“We’re resilient people. But it takes its toll on Canadians,” he said.

“It’s got to stop.”