Trump auto tariffs will derail Canadian, U.S. auto industry, professor says​on April 1, 2025 at 5:54 pm

OTTAWA — Instead of bolstering the U.S. auto industry, protectionist tariffs will touch off a period of chaos, instability and rising prices, one American academic says.

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As Canada and the world prepares for what U.S. President Donald Trump rather hopefully calls “Liberation Day” on Wednesday, Art Wheaton — director of the School of Industrial and Labour Relations at New York State’s Cornell University — told The Toronto Sun that the domestic U.S. auto market is in for a rough ride.

“In terms of the U.S. market, it’s about 50% made in the U.S., and 50% imported,” he said.

“What scares people even more is not necessarily the finished product imports having that tariff — it’s the cost of each individual part.”

German automaker BMW, for example, assembles many of their SUV and crossovers at their Spartanburg plant in Greer, S.C. —  built with powertrains imported from Germany.

“All of those engines and transmissions will hit that tariff, even though the vehicle is assembled in the U.S.,” Wheaton said.

“It’s going to hit Volkswagen, it’s going to hit everybody, because the way they were originally stated, there’s really no exemptions. Every country is going to get hit by these tariffs.”

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The situation is even worse along the Canadian and Mexican borders — porous frontiers where parts, components and completed vehicles cross the border multiple times, and with tariffs could add tens of thousands of dollars on the price of new vehicles.

There are cases, however, where auto tariffs have had positive impacts on the U.S. auto industry, Wheaton noted — pointing to the now 60-year-old “chicken tax” which adds a 25% tariff on imported pickup and light trucks.

“If the (tariffs) are permanent, in place and evenly distributed  to everybody, it could have a long-term venal impact,” he said, saying that these effects wouldn’t even begin to manifest until long after Trump leaves office in four years — particularly when one considers how long it would take for U.S. automakers to construct and commission new plants to replace those in Canada and Mexico.

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“In the short term, it’s going to mean a lot of lost jobs. It’s going to be a lot of pain in the U.S. and very likely Canada, as well.”

In all, he said, the tariffs aren’t going to provide the positive boost that Trump has envisioned.

“It has an impact on the local economy, it has an impact on used cars, it has an impact on rental cars, it has an impact on car insurance,” Wheaton said.

“It doesn’t just hit one small thing, it really ripples through the entire economy what happens in the auto sector.”

bpassifiume@postmedia.com
X: @bryanpassifiume

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