Canada-US Auto Tariffs: Impacts and Consequences

According to a report by Toronto-based TD Economics, proposed 25% tariffs on Canadian-made automobiles and other goods could harm both the US and Canadian economies.

Tariffs on Auto Sector

* The highly integrated auto sector between Canada, the US, and Mexico would face significant costs due to tariffs.
* Car parts and finished goods cross borders, making tariffs a burden for the industry.

Canadian Auto Production

* Canada currently produces approximately 10% of cars sold in the US.
* To onshore this production to the US as proposed, an estimated six new plants would be required, with billions in investment.

Impact on Consumers

* Average US retail car prices could rise by $3,000 due to tariffs.
* Retaliatory measures from Canada and Mexico could lead to severe economic consequences and demand collapse.

Full-Onshoring Costs

* To bring all North American auto production to the US would require a 75% increase in US production and over $50 billion in investment.

Auto Parts and Components

* Tariffs would force US automakers to onshore component production or import parts from other countries, increasing costs.
* Aluminum, a key auto part component, would see price increases due to tariffs on Canadian imports.

Conclusion

TD Economics' report highlights the potential negative impacts of proposed tariffs on the Canada-US auto trade. Consumers, automakers, and the overall economy could be significantly affected, warranting careful consideration before implementing such measures.