New U.S. tariffs on auto sector to devastate industry, raise consumer costs: industry

Cars zoom past the Ford Oakville Assembly plant in Oakville, Ont. on April 5, 2024. THE CANADIAN PRESS/Frank Gunn

Canadian auto industry leaders say the latest tariffs announced today by U.S. President Donald Trump will raise the prices of cars for consumers and devastate the sector.

“This is nuts,” said Flavio Volpe, president of the Automotive Parts Manufacturing Association.

“It seems he’s bent on doing the things that he’s been warned will shut down the American auto sector,” he said.

“And if (Trump) insists on tariffs on Canada and Mexico, his reward will be risking the employment of a million American autoworkers. He either doesn’t understand how intertwined we are or doesn’t care.”

Trump announced 25 per cent tariffs on all automobile imports effective April 2, which will begin being collected on April 3.

He said the Detroit Three automakers have to move their parts divisions back to the U.S.

Shares of Ford, General Motors and Stellantis all slid in after-hours trading.

The Canadian and American auto sectors are heavily intertwined -- automotive parts can cross international borders up to eight times before a vehicle is finally assembled, said Canadian Chamber of Commerce president and CEO Candice Laing. Tariffs could add thousands of dollars to the cost of that vehicle, she said in a statement.

“The consequences of today’s escalation in this destructive tariff war will not be contained to Canada, as much as the U.S. administration would like to pretend,” said Laing.

“Throwing away tens of thousands of jobs on both sides of the border will mean giving up North America’s auto leadership role, instead encouraging companies to build and hire anywhere else but here,” she said.

“This tax hike puts plants and workers at risk for generations, if not forever.”

Canada’s largest private-sector labour union agreed, saying it would have a direct impact on Canadian jobs.

“What we saw (Wednesday) are unjustified and unwarranted and potentially illegal tariffs that have been applied on the auto industry in Canada,” said Lana Payne, national president of Unifor -- which was formed from a merger including the former Canadian Auto Workers union in 2013. She noted auto workers have been an important part of the Canadian economy for more than a century.

“These are not Donald Trump’s jobs to steal. They are not Donald Trump’s jobs to take,” she told reporters at a press conference in Kitchener, Ont.

Asked how soon layoffs might begin after the tariffs are implemented, Payne said she needed to understand the full details of the tariffs before she could say.

“You have to realize it’s compounding tariffs on the auto industry. We use steel and aluminum to build cars. There’s a tariff on that. There’s a tariff that will be on finished vehicles, from what we understand, and the parts, the Canadian parts that are in that vehicle will be tariffed. So what will this mean? ... I don’t know yet, but what I can tell you is that none of this is good for Canadian jobs and Canadian workers right now.”

Trump’s executive order doesn’t appear to exclude vehicles built under the terms of the Canada-U.S.-Mexico Agreement on trade. He also stated that these tariffs are “permanent.”

David Adams, president and CEO of Global Automakers of Canada, said Trump’s tariff policies fly in the face of promises he’s made about affordability.

“Our perspective has always been that these tariffs really are taxes on the American consumer,” he said.

The uncertainty caused by the steady stream of announcements, exemptions, delays and threats is also weighing on the economy, added Adams.

“One thing that businesses hate is uncertainty,” he said.

The tariffs will lead to widespread shutdowns in the U.S. and Canada, Volpe said.

“Donald Trump doesn’t care about the wake he leaves in U.S. industry, and I think Canadians and other allies should disavow themselves of the idea that we can plead a case for our industries,” he said.

Volpe believes Trump won’t understand the damage he’s doing until it’s already done. “He may have to break it before he sees that it’s not working.”

The steel and aluminum tariffs already implemented are hits on the sector that can at least be absorbed in the short term, said Volpe, but that’s not the case with tariffs on the auto sector as a whole.

This report by The Canadian Press was first published March 26, 2025.

Rosa Saba, The Canadian Press

With files from reporter Kyle Duggan in Kitchener, Ont., and The Associated Press

U.S. President Donald Trump’s reciprocal tariffs on trading partners are set to take effect on April 2, a day he has proclaimed as “Liberation Day” for American trade. CTV News will have extensive coverage across all platforms:

• CTVNews.ca will have in-depth coverage, real-time updates, and expert analysis on what the tariffs will mean for Canadians.
• CP24.com will report on any developments out of Queen’s Park and what the tariffs means for the people of the GTHA.
• BNNBloomberg.ca will explain what this means for the business community, investors, and the market.