By Blair Qualey
Canada and the United States share a relationship that hasn’t always been perfect but has always been based on mutual respect and benefit. We have supported one another at the best and worst of times and have fought shoulder to shoulder during times of war to protect our collective freedom.
Trade disputes happen when a country is forced to protect its national interest, but the prospect of sweeping US tariffs on all Canadian exports go beyond that. Many see them as personal and perhaps that’s why it stings so much.
In the latest development this week, tariffs were ‘paused’ against Canada and Mexico as both countries agreed to boost border security efforts. As much as this ongoing saga may test our patience, at least there is a reason for guarded optimism.
Should tariffs prevail, the outlook would be extremely negative. RBC has suggested this would be the most significant ‘trade shock’ since the Smoot-Hawley tariffs of the 1930s, which were widely blamed for exacerbating and prolonging the Great Depression and far surpasses the 2018 tariffs in magnitude.
The Canadian Auto Dealers Association (CADA) suggests the impact on both sides of the border would be immediate, in the form of higher prices for vehicles and parts used to service them.
Auto exporting is a major economic engine for Canada, bringing in about $51 billion in 2023. About 93 per cent of those exports go to the US, exposing a major piece of the economy.
Vehicle and parts production and distribution across North America is highly integrated and the result of decades-long efforts and cooperation by the US, Canada and Mexican governments and manufacturers. More than 91 per cent of Canadian automotive and auto parts are exported to the US, and some parts cross the American or Mexico border as many as eight times before they are installed in a final assembly.
Canadian automotive dealers and the over 178,000 people they employ depend on functioning supply chains in order to sell and properly maintain the vital automotive infrastructure of Canada.
That means the stakes are high for an industry that is enduring the enormous costs and uncertainties of making the electric vehicle transition, considered one of the largest industrial transformations in history. What’s more, the auto sector is just getting back on its feet after several years of pandemic and post-pandemic challenges, supply chain issues, high interest rates and inflation that reduced consumer demand.
At this stage, most people are hoping that common sense will prevail because the alternative is something that will have a significant impact on our sector, the economy on both sides of the border – and I fear, might forever impact the relationship between our two great nations.
Blair Qualey is President and CEO of the New Car Dealers Association of BC. You can email him at [email protected].
