U.S. Tariffs on Cars Could Hit Canadians

Donald Trump's weapon of choice in the trade standoff between Canada and the U.S. has, up to this point, been tariffs. The U.S. president has most recently targeted vehicles, and should Canada be slapped with more tariffs, workers and consumers could be the biggest losers.

Last week, en route to Singapore from the G7 summit, Trump threatened to impose tariffs of 25% on Canadian cars, a reaction to Prime Minister Justin Trudeau's assertion that Canada wouldn't be "pushed around."

This week, one Republican party lawmaker warned Canada that the president isn't playing around and that this country should brace itself for auto tariffs.

The U.S. introduced tariffs on Canadian steel and aluminum at the beginning of June after an amnesty period tied to the North American Free Trade Agreement talks expired. Canada is preparing to impose dollar-for-dollar tariffs on July 1 in retaliation.

Autos have been a sticking point for the trade deal negotiations, with the U.S. asking for new directives on rules of origin, and quotas for American content in vehicles.

?Duties imposed by the U.S. may be intended to force Canadian trade negotiators to step on the gas pedal to move NAFTA negotiations forward, but experts say the tariffs would cause more long-term damage.?

One auto industry analyst opined that large tariffs on Canadian cars would increase prices, which, in turn, would cause market demand to drop as people struggle to afford new vehicles. Manufacturers would have to cut costs and jobs would begin to evaporate.

The majority of cars produced in Canada, including vehicles by Chrysler, Ford, General Motors, Honda and Toyota, are manufactured in Ontario — however, many of the parts used to build the vehicles are made in the U.S.

Another industry analyst said jobs would likely shift to plants in the U.S., leaving thousands in Canada out of work.

Statistics Canada says this country`s vehicle manufacturing industry employs about 125,000 people. About 70% of those jobs are in automotive parts manufacturing.