Auto sector frets that tariffs will destroy EV transition, help China

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Perhaps US President Donald Trump may have said that he will apply 25 percent of the customs tariffs on Canadian goods on Tuesday, but on Monday car executives are still scrambling to find out if this means.

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The phone lines lit up, hit chat channels, held personal meetings and emails were sent as car executives, and pressure groups spent hours reading tea papers to see if the American definitions will arrive, how they will be applied, and how time they can continue and other details.

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The car sector in Canada sends 90 percent of its exports to the United States, making it especially vulnerable to a 25 percent tariff. Those familiar with the auto industry said it will have a significant impact on sales, which imposes on car production within weeks, not months.

Around the middle of the morning on Monday, Trump decided to delay the definitions in Mexico for one month. But Canada has not received a similar postponement by mid -afternoon. Meanwhile, Trump posted messages on his social media platform that sparked new complaints about the arrival of American banks to the Canadian markets, which are seen as a curved ball by some who indicated that he previously said that the definitions related to the flow of fentanel and illegal borders Transit to the United States

“We need to start our time talks,” said Tim Ross, head of the Canadian Automobile Dealers Association, a pressure group. “Let’s say it is turbulent times. It seems that there is a moving target here and we are just trying to keep our members as much as possible.”

One of the main questions discussed in the auto sector is the reason that Trump wants to apply definitions to Canada at all, given that it is a close ally and one of its largest commercial partners. One of the intellectual schools believes that Trump hopes to raise funds through the customs tariff to help pay the price of the promised tax cuts, and that it will be short -term and canceled before it enacted a lot of damage to the economy of North America.

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But a second intellectual school believes that Trump wants to pressure companies to transfer their manufacture to the United States, which may mean that the definitions must be valid for years due to the level of investment needed for complex manufacturing.

Either way, no one in the automotive sector believes that production can continue profitable with a 25 percent tariff. The immediate effect will be an increase in the price of the car in the United States, which in turn will affect the total sales, then return to slowing production in Canada until it stopped in the end.

“Whether it takes a week, two weeks, or anything else, this is not a long time,” said David Adams, head of global auto manufacturers in Canada, a group of pressure for non -North car manufacturers such as Volkswagen AG.

The exact impact depends on the price of a new vehicle on whether the tariff is applied every time an automatic part crosses to the border between the United States and Canada or if it is applied only once to the final product-a vehicle that appears to a merchant.

Ross said the definitions will also affect the sales of Canadian vehicle. To the extent that many economists believe that the customs tariff will enter into a stagnation, it is possible that the sales of local vehicles will be withdrawn.

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Brian Kingson, head of the Canadian Automobile Manufacturers Association, referred to the protests of the Freedom convoy in 2022 that stopped traffic on the ambassador bridge, which connects Windsor, Onton, to Detroit – informal capitals of the auto manufacturing sector in each country.

Within a few days, car plants on both sides of the border faced challenges that dwarf production.

He said: “We will consider stopping production throughout North America, loss of jobs and prices,” and this cannot come in a worse time because the sector turns “during the transmission of energy.

Kingston said that no one knows the accurate economic impact of definitions because the details are vague and are obtained by reading social media posts, which cannot be always reliable. However, the initial stadium estimates indicate that the customs tariff will add at least $ 3000 to $ 6000 per vehicle for the manufacturer’s cost and perhaps much more.

He said that the creation of new production costs in the car sector in North America – through definitions – is likely to benefit China as it increases its share of the growing electric car market.

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Meanwhile, the customs tariff will work on the entire vehicle supply chain in North America, even from the source workers on the source who rely on car manufacturers to help finance their projects.

Greg da Ri, Vice President of Corporate Development at Frontier Lithium Inc. said. , Which is developing a difficult rock mine in Ontario, the customs tariff will affect his company because it collects money to start lithium mining, which can be used in batteries for EVS.

“We do not want to see the definitions because they endanger the car companies, and this is our customer towards the course of the river,” he said. “The last thing we need is uncertainty: at the present time, all eyes in Canada as a stable place to invest in this energy transmission. This type of things is a kind of key in business.”

At the present time, car manufacturers hope to back down from Trump and never implement definitions or reduce his position in an unexpected way. Of course, no one knows anything.

“This is the way the president works,” Adams said. “To keep everyone uncertain.”

• Email: GFriedman@postMedia.com

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