The threats of President Donald Trump of tariffs on Canadian products that enter the United States and their planned imposition of tariffs in imported steel and aluminum have caused alarms in the Canadian automotive sector, with experts warning about possible work stops and interruptions of the Supply chain.
But experts say that building cars in Canada for the Canadian market is not the answer; Instead, Canada could look outside the “North-South” corridor.
Canada has a strong and prosperous manufacturing sector with five world car manufacturers, said Brian Kingston, president and CEO of the Canadian Association of Vehicle Manufacturers (CVMA).
“But the entire industry has been designed around this northern-south integration,” he said.
“If we are entering an era of highly protected national markets … that is highly inefficient. It is extremely expensive to do it because Canada is a relatively small market.”
Canadians buy less than two million vehicles each year, approximately the same number that brings together the country, he said.
But cars gathered in Canada are largely destined for the US market.
Trump wants Canadian assembly vehicles made in Detroit
Trump has expressed his disdain for these exports, saying that he would prefer to build cars in Detroit.
The president of the United States has three times since its inauguration of January 20 threatened tariffs that would affect the automotive industry of North America.
First, he promised 25 percent tariffs on all Canadian goods and a 10 percent rate on energy, all of which have been suspended for 30 days, while Canada seeks to address the concerns of the United States about border security.
On Monday, Trump told a Fox News reporter that he would impose a rate of up to 100 percent in Canadian manufacturing cars “Yes [the U.S. doesn’t] Make a deal with Canada. “
That same day, he announced a 25 percent tariff on steel and aluminum imported to enter into force on March 12.
But the automotive industry has been integrated both in the last 60 years as a result of successive free trade agreements that the components of the automobile travel through the Canada-United States border several times before a final vehicle leaves the line of the line of Assembly, said Dimitry Anastakis, professor at Rotman School of Management at Toronto University.
The tariffs that avoid the free flow of pieces between Canada and the USA could lead to job stops due to cross -border supply chain interruptions, Kingston has said.
However, building vehicles for the Canadian market in Canada is “a pretty idea” but not a sustainable alternative, according to a mechanical and automotive engineering professor at the University of Windsor.
Peter Frize was part of a team that tried to design a Canadian car and said they could not get the industry to touch it.
Australia cannot maintain the national automotive industry, says the expert
“It was absolutely out of discussion,” said Frize, who founded the National Automotive Research Network in 2000.
“As soon as we talked to the industry, they began to hit the door as strong as they could … They said that is absolutely impossible. We would never do that. We don’t even want to talk about that … we could never allow ourselves to do that.”
For example, Australia tried for many years to compete in the automotive sector, said Dennis Darby, president and CEO of Canadian manufacturers and exporters.
“He had his own car companies, which were all world car companies operating in Australia protected by rates,” Darby said.
“And finally they gave up, and there is no production at all in Australia because they simply could not.”
It was once common to see branches of US plants in Canada building all kinds of products for the Canadian market, but technology has evolved, said Darby, and car manufacturers have consolidated.
“It is simply not practical to build a car company from scratch,” Darby said. “The last person to do that was Elon Musk, and had billions of dollars of capital.”
These days, Canada is home to manufacturers of mass parts such as Magna International, which produces products for the global supply chain.
Canada needs to search for new markets, says Expert.
The best course of action for Canada, he said, is to look for ways to grow the market of those products outside the United States.
“What we have not done as Canadians is to build runners of Este-West really good,” he said.
“We have these free trade agreements with Asia, and we have free trade agreements with Europe. And … we have not taken advantage of them.”
Frize said that Americans will also be fighting as a result of tariffs and tariff threats.
About 90 percent of the aluminum used in the automotive industry comes from Quebec, he said.
“They can’t replace it realistically,” said Frize.
“The key ingredient is really huge amounts of electricity. And it has to be electric, and the United States does not have the generation capacity to do so … they would have to build, I don’t know, half a dozen nuclear power plants.”
