Impact of Canadian Tariffs on US Economy and Auto Industry

Summary:

A recent report from TD Economics outlines the potential negative consequences of President Trump's proposed 25% tariffs on Canadian-made autos and other goods. The report highlights the deeply integrated nature of the auto sector between Canada, the US, and Mexico, and the significant costs and disruptions that tariffs would impose.

Key Points:

* Canada currently produces approximately 10% of cars sold in the US, while Mexico supplies nearly 20%.
* If 10% of Canadian-made cars were to be onshored to the US, an estimated six new auto plants would be required, at a substantial cost.
* Average US retail car prices could increase by $3,000 or more due to tariffs.
* Tariffs would also impact auto part and component production, leading to higher costs for US automakers.
* Aluminum prices, a key component in auto parts, would also rise, potentially passing the cost onto consumers.

Implications:

* Tariffs on Canadian goods would harm not only Canada, but also US automakers and American consumers.
* A full-onshoring of North American auto production to the US would be prohibitively expensive, requiring a significant boost in US production and billions in new investment.
* The report emphasizes the interconnectedness of the auto sector across borders and the negative impacts that trade barriers would create.