Trump fact-check: No such thing as 'Canadian' or 'American' cars, experts say
Trump on Tuesday threatened to slap 50 to 100 per cent tariffs on the Canadian auto sector should the two countries fail to reach a deal, claiming Canada "stole" the car industry from the U.S.
"We don't want their cars, we want to make the cars in Detroit," he told Fox News.
But the U.S. and Canadian auto industries are so deeply integrated, experts say, that there's currently no such thing as a purely Canadian or American car.
"I think it would be extremely difficult to find, if not impossible, frankly, to find a car that is entirely made in Canada or entirely made in the U.S. — or entirely made in Mexico, for that matter," said Tu Nguyen, an economist at RSM Canada, a Toronto-based consulting firm.
"I don't think there is such a thing," said Peter Frise, a professor of automotive engineering at the University of Windsor.
He also said Trump's assertion that Canada "stole" the industry is "not correct at all."
"The narrative seems to change from day-to-day," Frise said. "But there's no question about it: Some of the things that he is using in his narrative are simply not correct."Trump's comments were among the latest warning shots in the trade war the president has sought to unleash on the U.S.'s closest neighbours since he entered office less than one month ago.
On Friday, he floated April 2 as the start date for auto-specific tariffs, but didn't specify which countries they would target or how much they would be.
Trump has also targeted all Canadian and Mexican goods with a 25 per cent tariff, but punted the implementation until March after initial negotiations. He's already signed an order to impose a tariff on foreign steel and aluminum – including from Canada, the U.S.'s biggest supplier.
But placing a tariff on the automotive industry would prove especially damaging — and costly — for both the U.S. and Canada, the experts said, because of how interconnected the supply chain is.
"The reality is that the North American auto industry has spent decades of collaboration and trade and so much time and money building up these extremely integrated supply chains," Nguyen said. "And there are a lot of car parts that are only made in one country."
Parts can cross the border more than a half-dozen times before the car is complete, she wrote in December.
Frise says the industry's "very integrated" and "highly optimized" supply chain has been built over several decades, starting with the 1965 Auto Pact between Canada and the U.S.
"It holds costs down, which is good for consumers," he said, "and it provides jobs on both sides of the border."
It also provides more consistent quality by allowing one location to specialize in a specific part or assembly, he said.
For instance, Chrysler's Pacifica minivans are assembled in Windsor, but the engines are built at a plant in Michigan. On the flip side, Ford produces engines in Windsor-Essex for vehicles it assembles in other locations.
Both Frise and Nguyen say building and tooling new factories for parts and assembly exclusively in the U.S. would cost billions and take years — costs that would be passed onto the consumer. In the meantime, the effects of tariffs on the North American auto sector would be severe, including for Americans — something echoed this week by Ford CEO James Farley.
"Let's be real honest: Long term, a 25 per cent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we've never seen," Farley said.
WATCH: Trump is threatening tariffs on Canadian cars — and it's causing uncertainty in Windsor
Frise says auto-specific tariffs would have a near-instantaneous effect on car prices, making them jump by thousands, which could quickly lead to sales drops.
"A car is a very deferrable purchase," Frise said. "So if the sales of cars slow down a lot or stop, then production will stop. The factories won't make cars if they're not selling. And so there could be, you know, hundreds of thousands of people laid off very, very quickly if these tariffs take hold."
"There needs to be a much deeper understanding of the industry on the part of the administration," Frise said, before it makes major changes, because the effects could be the opposite of what Trump has said he is trying to achieve: more manufacturing jobs for Americans.
One way Trump could achieve that goal would be by strengthening the U.S. education system, Frise says.
"They have a chronic shortage of skilled tradespeople and engineers," he said. "And you can't make things without those kinds of people with skills like that. And so they need to graduate more engineers and more skilled tradespeople."
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