Canadian, U.S. officials meeting again on trade deal as midnight tariff deadline looms

Can Canada’s auto sector survive this proposed deal?

Most of the cars Canada builds are sold into the United States. Trump has repeatedly said he wants that to stop. The leaked details of the deal-in-negotiation suggest Ontario’s auto sector will continue to face tariffs, though at a lower rate.

It likely dooms the industry to a slow death, Daniel Tisch from the Ontario Chamber of Commerce told CBC.

The margins for automakers are tight. The current 25 per cent tariffs are money-losing. Lowering it to 15 per cent doesn’t change that math. 

“Over the longer term, the business case becomes much less reliable,” said Greig Mordue, a former Toyota executive who’s now an associate professor at McMaster University. He points out the automakers have big investments in Canada, with assembly plants costing $2 billion to $3 billion to build, but some will get to a point where they’ll just cut their losses.

The Detroit Three automakers have already started moving vehicle assembling out of Canada to U.S. plants that have spare capacity. The GM plant in Ingersoll, Ont., has closed. The Stellantis plant in Brampton, Ont., is idled, and may be sold. A shift has been eliminated by Ford in Oakville, Ont.

Ontario’s auto sector has been shrinking for decades, with fewer jobs and fewer vehicles produced. Now, with tariffs seemingly being baked in permanently, automakers will reassess the long term.

“I think that this may one day we’ll look back and say this was the death knell,” said Ian Lee from Carleton University’s Sprott School of Business.

While most of the details and caveats of the proposed deal are still not known, you can bet in Ontario many are questioning how much longer the auto industry can survive with tariffs of any kind.