The “Trump Effect” – On Canada’s Automotive Industry

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The 45th president of the United States has been sworn in and whether you agree with his politics or not, it’s fair to say that Trump has already made a huge impact on the world with his endless smiles and fabulous hair.  All jokes aside, many members of the Canadian Auto Industry are anxiously holding their breath to see how the Trump effect will impact us here in Canada.

Here’s what you need to know:

  1. Trump has stated he is working to revitalize the American auto industry by encouraging more manufacturing within America and adding heavy taxes and/or tariffs to all imported auto parts or vehicles coming into the country. Trump’s spokesperson Sean Spicer stated “When a company that’s in the U.S. moves to a place, whether it’s Canada, or Mexico, or any other country seeking to put U.S. workers at a disadvantage, then Trump is going to do everything he can to deter that,”
  1. Roughly 10% of American cars are made in Canada although many of the parts used in Canadian plants are imported from all over the world including Mexico. Canada is home to five major automakers that assemble vehicles and export to the tune of $60-billion worth of cars, crossovers and minivans to the United States last year.

This year the Canadian Auto Industry was making plans to expand with Honda Motors recently announced they will be driving $400,000 million dollars into the Alliston Ontario plant.

  1. Trump has also promised to make changes to the current NAFTA (North American Free Trade Agreement) between Canada, America and Mexico. Trump’s spokesman Sean Spicer said that Trump planned decisive trade moves in the coming days. He said Trump would issue an executive order on NAFTA and the Trans-Pacific Partnership, but didn’t say specifically whether he would serve notice of the U.S. intent to withdraw.

According to industry analyst Dennis DesRosiers,“It is increasingly likely these acts will lead to a renegotiation of NAFTA that will reduce or eliminate protectionist measures exempted from NAFTA. “nixing NAFTA or imposing a Mexican tariff could seriously hurt North American auto sales and the Canadian automotive sector as a whole. Even scarier is the fact the industry may be first on Trump’s policy targets list, says DesRosiers.

The Bottom Line: Trump has Canada stumped. It’s very much a wait-and-see type situation.

DesRosiers predicts “the reaction from automakers could go two ways: they could simply move production back to the U.S.; or they could “price to the tariff,” meaning they could jack up prices to cover the tax. The latter would hurt both consumers and automakers”.

What’s my two cents, I’m glad you asked – as a former auto sales representative, Van Dusen Chevrolet, Buick GMC Brand ambassador, in my opinion if you need a new car within the next year or so go ahead and buy it umm… let’s say now because chances are prices are likely to go up by 15-45% within the year. The cost of parts will likely be on the rise as well so if your emergency fund is not yet filed to the brim – go ahead and buy that extended warranty or you could always take an auto mechanics course and DIY with some chewing gum and a wire clothes hanger like my Dad used to do.    

We want to hear your take on the issue. Do you work in the Canadian auto Industry?  How has the Trump administration affected you and your work environment? What issues or concerns are you facing?   


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