Trump’s tariffs would hit Canada auto industry – consultant
Stefan Baumgarten
18-Jan-2017
TORONTO (ICIS)–US tariffs on imported cars and
vehicles and the dismantlement of the North
American Free Trade Agreement (NAFTA), as threatened
by President-elect Donald Trump, would have
“serious negative implications” for Canada’s auto sector, a
Canadian auto consultant said on Wednesday.
Canada’s auto industry is “totally integrated” with the US
since a 1965 “auto pact” between the countries,
and US-Mexican auto sectors are similarly integrated
under NAFTA since 1994, Dennis DesRosiers, president of
consultants DesRosiers Automotive, said in a webcast media
briefing on Canadian business television.
“To undo that would cause all kinds of inefficiencies,
potentially a market collapse,” DesRosiers said.
“How do you unravel 50 years of [Canada-US] integration, how
do you unravel duty-free shipment of thousands of components
that it take to build a vehicle,” he asked.
Such an unravelling would “completely decimate” the structure
of the North American auto sector, making vehicles
significantly more costly and leading to a market collapse,
he said.
The consultant added that it was not imaginable that the
new president would want to trigger thousands of job
losses, not just in Canada and Mexico, but also in the US.
Still, Trump is unpredictable and there is a possibility of
such a disaster happening, and “that’s why everybody should
be worried about it”, he said.
DesRosiers also argued that this month’s investments
announced by automakers for the US were hardly due to
Trump.
“Those investments would have been announced anyway, maybe
the timing has changed because of Trump” as the companies, by
allowing the president-elect to claim credit, were trying to
gain favour with the new US administration which will take
office on Friday, 20 January, he said.
Even Ford’s decision this month to cancel a previously announced $1.6bn
investment in Mexico was not driven by Trump’s threats of
taxes or tariffs, the consultant said. Rather, Ford was
responding to a shift in the auto market towards light
trucks, away from the Ford Focus cars that would have been
manufactured in the Mexican plant.
DesRosiers said that auto firms, in bringing forward
announcements of investments they would have made
anyway, were “calming the waters a little bit”. “Hopefully
that kind of settles Trump down a little bit”, allowing for
“saner views” to come to the forefront, he added.
Canada’s automotive industry, which is concentrated in
southern Ontario, produces more than 2m vehicles per year,
with much of the output being exported to the US. The big
three Detroit auto giants, Ford, General Motors and
Fiat-Chrysler, and some Japanese producers, have substantial
operations in Canada, and about one in seven Canadian jobs
depends directly or indirectly on the auto industry.
While there is no Canadian auto brand as such, Canada’s auto
industry ranks as the eighth largest in the world, according
to the country’s government.
The automotive
industry is a major global consumer of petrochemicals which
contributes more than a third of the raw material costs of an
average vehicle. ICIS tracks the movement of petrochemical
raw material costs in auto production both globally and
regionally with the weighted ICIS Basket of Automotive
Petrochemicals (IBAP).
ICIS produces a monthly Global Automotive report
covering the major automotive chemicals
markets, the auto-industry, the IBAPs and
macroeconomic trends. For more information on the report and
details on how to subscribe, please click
here
Global News + ICIS Chemical Business (ICB)
See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.
Contact us
Partnering with ICIS unlocks a vision of a future you can trust and achieve. We leverage our unrivalled network of industry experts to deliver a comprehensive market view based on independent and reliable data, insight and analytics.
Contact us to learn how we can support you as you transact today and plan for tomorrow.