The president of the Automotive Parts Manufacturers' Association says North America’s deeply integrated auto industry would sooner shut down than operate in a trade environment that puts 25 per cent tariffs on parts and vehicles entering the U.S.
In an interview with BNN Bloomberg on Wednesday, Flavio Volpe said that auto industry players in Canada, the U.S. and Mexico all share the same frustration over the numerous tariff threats made by U.S. President Donald Trump in recent weeks.
“We all know that you can’t make a car without all of the parts arriving in time, and so if you create a tariff that is at 25 per cent… somebody, either the carmaker, the parts supplier or ultimately the consumer, will have to pay,” he said.
“You can’t just lower the price and figure it out. When it crosses the border, somebody has to take that money from reserves and put it into a U.S. government account… the industry will shut down before it operates in a 25 per cent tariff range.”
Trump’s tariff rhetoric has been seemingly unending since he took office one month ago.
The White House originally threatened to impose across-the-board tariffs on all Mexican and Canadian goods entering the U.S., but more specific threats to tax all imports of steel, aluminum, and most recently, semiconductors and automobiles, have since been made.
The auto industry was already set to be one of the hardest hit in any tariff scenario, according to experts, especially if targeted countries including Canada impose retaliatory tariffs of their own.
But Volpe said that while he’s always taken Trump’s trade threats seriously, the industry is in a holding pattern for the time being until U.S. authorities start enforcing and collecting import levies.
“(Trump) hasn’t been clear… I’m old enough to remember when Wendy’s used to sell you hamburgers under the campaign of ‘Where’s the Beef’ – we need to see paper before we can calculate and respond,” he explained.
“Hopefully we see none of it, but I’m not dismissing what he’s saying. We are taking very seriously that he wants to recast the relationship, but we can’t do anything until we actually see paper.”
Volpe added that if Trump’s ultimate goal with his trade policies is to create “winning conditions” for American manufacturers, imposing tariffs on two of the country’s closest trading partners, potentially igniting a North American trade war, would be counterproductive.
“Cutting off Canada and Mexico is the worst playbook anyone could come up with,” he said.
Volpe argued that going forward, the Canadian auto sector needs to be strategic in its negotiations and present a unified defensive front rather than attempting to plead its case with Trump administration officials, many of whom may not be willing listen.
“I’m going to Washington tomorrow in that effort, (saying): ‘Hey by the way, here are the numbers in case someday you’re going to come back around to the math and science… 156 plants employing 50,000 Americans in 18 states are owned by Canadian auto suppliers,’” he said.
“We’re American investors and American employers, don’t cut off your nose to spite your face.”
