The North American auto sector could be the first of many industries devastated by the Canada-US trade war.
Driving the news: Leaders from North America’s auto industry are warning that tariffs will force some auto plants to shut down production in the coming days.
- One head of a large auto parts supplier in Ontario with factories in Canada, Mexico, and the US said she expects to “see vehicle production in North America grind to a halt” within a week. The president of Canada’s Automotive Parts Manufacturers’ Association echoed that claim.
Why it matters: The auto manufacturing industry directly employs around 125,000 people in Canada and more than a million in the US — even a temporary shutdown will be highly damaging to both economies.
Why it’s happening: North America’s auto sector is tightly integrated, with thousands of parts going into each vehicle, many of which will cross a border up to eight times before being assembled into the final product. As a result, tariffs are expected to cost the industry US$60 billion.
- Canada and Mexico produce 5.3 million vehicles per year, most of which are imported into the US, and tariffs will raise the cost of the average vehicle by around $3,000, according to analysis by Wolfe Research.
Bottom line: As one of the continent’s most tightly integrated sectors, the auto industry will be one of the first to feel the consequences of the trade war.
Get smarter about what matters. Sign up for The Peak, a free five-minute daily email on Canadian business, tech, and finance that you’ll actually enjoy reading.