If there’s one sector in the Canadian economy that has faced the particular focus of U.S. President Donald Trump‘s tariff threats, it’s Canada’s auto industry.
Trump has said that he wants to “make the cars in Detroit,” indicating that he wants to replace Canada’s industry with a fully domestic American car industry.
But experts say it could end up costing the U.S. tens of billions of dollars and in the end, the squeeze might not be worth the juice.å
In an interview with Fox News earlier this month, Trump said Canada “stole” the automobile industry from the United States.
“If you look at Canada, Canada has a very big car industry. They stole it from us. They stole it because our people were asleep at the wheel,” Trump said.
He added, “If we don’t make a deal with Canada, we’re going to put a big tariff on cars. Could be a 50 or 100 per cent because we don’t want their cars. We want to make the cars in Detroit.”
But can that be done?
A map depicting car manufacturing facilities in Canada.
“It’s not feasible,” said Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association. “It’s not realistic to onshore the entirety of the North American automotive industry into the United States.”
He added, “We’ve had, for over 60 years, policies that have been purposely designed to create an integrated North American industry.”
How does the auto sector work?
The automobile manufacturing sector and its supply chain in Canada and the United States have been deeply integrated since the 1960s.
In 1965, former prime minister Lester B. Pearson and former U.S. president Lyndon B. Johnson signed the Canada–United States Automotive Products Agreement, commonly known as the Auto Pact.
Canada’s automotive parts manufacturing industry, in numbers.
The agreement removed tariffs on cars and car parts between the two countries.
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This was in effect until 1994, when the North American Free Trade Agreement (NAFTA) went into effect, extending free trade to all sectors, not just car manufacturing.
In 2018, NAFTA was…
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