Within two weeks of U.S. President Donald Trump’s latest tariffs announcement, experts say Canadian auto insurers and vehicle manufacturers may not be able to recover from the damage done by levies. Read More
Levies exacerbate ‘untenable’ market conditions for auto insurance and wider industry — and Alberta’s rate cap won’t help, expert says
Levies exacerbate ‘untenable’ market conditions for auto insurance and wider industry — and Alberta’s rate cap won’t help, expert says
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Within two weeks of U.S. President Donald Trump’s latest tariffs announcement, experts say Canadian auto insurers and vehicle manufacturers may not be able to recover from the damage done by levies.
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On Wednesday, federal Finance Minister Francois-Philippe Champagne introduced a relief measure that allowed auto companies manufacturing vehicles in Canada to import a limited number of vehicles, compliant with the Canada-United-States-Mexico trade agreement, that are exempt from retaliatory tariffs.
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However, the number of vehicles a company is permitted tariff-free will drop if there are reductions in Canadian production or investment.
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The measures follow Trump’s April 3 announcement of 25 per cent tariffs on all imports of automobiles to the U.S., with a partial carve-out made for vehicles built under the CUSMA. Ottawa, in response, put similar tariffs on U.S.-made vehicles bound for Canada.
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The tariffs by U.S. and Canada have stressed an industry already weighed down by rising costs of auto parts, manufacturing and natural disaster mitigation.
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“It’s going to create issues with the availability of products we need when people are getting into accidents, whether that’s parts or replacement vehicles, the tariffs themselves and the Canadian tariffs,” Aaron Sutherland, vice-president for the Western and Pacific region for the Insurance Bureau of Canada said.
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“That’s adding significant cost pressures to the prices of auto parts, of replacement vehicles and ultimately that goes into premiums,” he said.
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Only two of five automakers in Canada still producing at full capacity
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Stellantis, General Motors and Ford have announced they have paused production to study tariffs, to resolve other problems, or to retrofit an existing plant.
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On April 2, Stellantis announced it would pause operations at its Windsor, Ont., assembly plant to observe the impact of tariffs for two weeks. The company had already paused retooling an assembly plant in Brampton, Ont., in late February, a refitting that was estimated to take two years and cost $1.3 billion.
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The company had said it plans to restart operations in Windsor on April 21, but has not said anything new about its Brampton retooling.
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The week after Stellantis’ announcement, General Motors announced it was temporarily pausing production of its electric cube van, known as BrightDrop, that it had been producing in Ingersoll, Ont., due to market conditions and inventory.
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The company informed Unifor, the union representing workers in the auto industry, that they planned to initiate temporary layoffs, starting April 15, with some workers returning in May for limited production.