‘Counterproductively devastating’: Auto industry reacts to Trump’s new tariff threats

President Donald Trump, seen addressing a crowd in Myrtle Beach, S.C., on Aug. 21, has threatened new tariffs on Canada starting Jan. 1. (AP Photo/Jacquelyn Martin)

Photo: (AP Photo/Jacquelyn Martin)

Jeff Lagerquist (new window) · CBC News

Members of Canada’s auto industry are responding with a mix of frustration, confusion and concern to U.S. President Donald Trump's new threats to double some American tariffs on cars, trucks, auto parts and steel from Canada.

After Canada rejected a U.S. trade proposal late on Friday, Trump wrote on Truth Social on Monday that the levies would rise to 50 per cent from current levels as of Jan. 1, 2027.

Lucas Malinowski, CEO of Global Automakers of Canada, says it’s hard to know how seriously stakeholders in his industry should take Trump’s post.

We’ve seen outbursts like this in the past that haven’t necessarily led to any change in tariff and trade policy. We’re waiting to see if that does in fact happen, he told CBC News on Monday.

His industry group represents major non-domestic automakers, including Toyota, Volkswagen, BMW, Honda, Hyundai, Nissan and Mercedes-Benz.

A move like that would be obviously very concerning for the Canadian auto sector, but also counterproductively devastating for the American auto sector, Malinowski said.

Trump’s threat to raise these levies is the latest escalation in the Canada-U.S. trade war since talks broke down prior to Friday’s midnight deadline to avoid 50 per cent U.S. tariffs on about $28 billion worth of Canadian goods.

On Saturday, Prime Minister Mark Carney promised to match American levies dollar for dollar after Sept. 8. Carney said Canada’s response will focus on U.S. steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics.

In his Monday morning post, Trump went on to slam Canada, saying the country is among the worst Nations in the World to deal with.

They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US! They do 95% of their business with the U.S.

Finished vehicles and non-CUSMA-compliant auto parts imported to the U.S. from Canada are currently subject to 25 per cent levies. Canadian steel currently faces tariffs ranging from 10 per cent to 50 per cent.

On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%, Trump wrote on Truth Social at 9:38 a.m. ET. Canada has been ripping off the United States of America for years.

Flavio Volpe, president of the Automotive Parts Manufactures’ Association, clarified on Monday that the U.S. auto industry, not Canadians, would pay the higher tariffs Trump is threatening.

We've been over this. The 'importer of record' pays the tariffs, Volpe wrote on X. A threatened US tariff on Canadian auto parts will be paid by US auto assembly. Without those specific parts, auto assembly throughout the US would halt.

Volpe added that he expects members of the U.S. auto industry will be on the phone with the White House today.

Added costs for entire auto industry

Malinowski said the ongoing trade war has already put a damper on business.

Canada is the largest market for U.S.-made cars, larger than the next three export markets combined, he said. In the case of U.S. exports to Canada, they’re down 22 per cent and $7 billion over the last year.

Malinowski estimates tariffs and trade disruptions have added $110 billion in costs over the past year and a half to North America’s auto industry.

Ontario Premier Doug Ford also weighed in on Trump’s latest tariff threat, telling CBC News that the U.S. president can kiss my ass.

We need to throw everything and the kitchen sink at them. He's arrogant, he's cocky, Ford told CBC News.

And that's all Donald Trump is … a bully. Well, he's going to have a rude awakening.