
Plunge in automotive exports leads record Canadian trade deficit
Combined with parts, automotive shipments to Canada's largest trading partner plunged by more than 17 per cent in value from the previous month, the largest sectoral drop in merchandise trade shipments reported by Statistics Canada on Thursday.
Carmakers based in Ontario have responded to the tariffs by slashing production, idling assembly lines and laying off workers.
'The tariff impacts are significant, and it makes it very challenging to build a vehicle in Canada and export it to the U.S. in the face of a 25-per-cent tariff,' said Brian Kingston, president of the Canadian Vehicle Manufacturers' Association, which represents Ford Motor Co., General Motors and Stellantis NV in Canada.
The U.S. and Canadian auto industries are highly integrated, an efficient system built on decades of free trade. The U.S. is the buyer of almost all of Ontario's auto production, Mr. Kingston noted by phone.
Mr. Trump says his rollout of tariffs on most trading partners is intended to bring home manufacturing and spur countries to stop the flow fentanyl and illegal migration while balancing trade.
His tariff policies have changed repeatedly, leading to chaos in the auto industry and other sectors.
The U.S. auto industry has called the tariffs inflationary and bad for sales and production. It takes years and billions of dollars to move supply lines and factories, industry members and experts say.
'This data just underlines the importance of getting to an agreement with the Americans as quickly as possible, removing these tariffs and returning to North American automotive production,' Mr. Kingston said.
Canadian-assembled vehicles are subject to a 25-per-cent tariff, reduced by the amount of U.S. content, which is typically about 50 per cent. Canadian parts enter the U.S. tariff-free but are subject to duties when attached to a Canadian-made car.
Canadian auto-parts factories depend on vehicle assembly plants for about half of their sales.
Ahead of the tariffs, Canadian vehicle exports rose by 21 per cent, Statistics Canada said, as U.S. importers rushed to beat the duties.
Flavio Volpe, head of the Automotive Parts Manufacturers' Association and represents Canadian suppliers, said the tariffs are hurting companies in Canada and the U.S. He noted three of Ontario's vehicle exporters are Detroit-based.
'We're so intertwined, half of that effect is being borne by American balance sheets,' Mr. Volpe said, calling the drop in shipments a 'self-inflicted wound.'
Ontario is home to a Stellantis NV minivan and Dodge Charger plant in Windsor; a General Motors pickup truck plant in Oshawa and a parcel van factory in Ingersoll; a Honda factory in Aliston; and Toyota plants in Cambridge and Woodstock. Two other sites are closed and awaiting retooling for new vehicles: Ford Motor Co. in Oakville and Stellantis in Brampton.
Since the tariffs kicked in, GM and Stellantis have announced layoffs, production reductions or delays and periodic shutdowns of assembly lines. Honda has delayed a massive electric vehicle project.
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