(CNN) — President Donald Trump’s threat of 50% auto tariffs on all imports from Canada is just the latest action to rattle an industry that’s endured shifting trade rules since he returned to office.
Trump issued the auto tariff plans early Monday, just as trade tensions between the two neighbors ratcheted up. On Saturday, the US slapped 50% tariffs on a much more limited group of Canadian exports after efforts to strike a deal collapsed.
But the steep auto tariffs, if enacted, could disrupt long-established business practices and have far-reaching consequences across the auto industry, experts say.
“Sweaters, honey and hockey sticks are not a trade war. What the president just threatened this morning is a trade war,” said Patrick Anderson, CEO of Anderson Economic Group, a Michigan-based consulting firm. “It would be a body blow to the auto industry. We would see plants closing on both sides of the border.”
Canada does have a large trade surplus with the United States. But when it comes to the auto industry, it’s the opposite — the US has a nearly $1 billion a month trade surplus with Canada.
America imported $24.5 billion worth of Canadian vehicles and auto parts in the first six months of this year, according to Commerce Department trade data, compared to the $30.4 billion Canada imported.
Since the North American Free Trade Agreement was first introduced in the 90s, and then the US-Mexico-Canada Agreement during Trump’s first term, the auto industry has been able to operate as if North America is a single market. Companies move parts and vehicles freely across borders, often multiple times before the car is assembled and sent to dealer showrooms.
Even with last year’s auto tariffs, that process continued. That’s because carve outs allowed Canadian-made parts and vehicles to remain more or less tariff free.
Disrupting that flow will cost US jobs, both for the auto parts industry and at assembly plants.
“The impact of unworkable tariffs would be felt well beyond Canadian assembly plants,” said Erin Keating, executive analyst with Cox Automotive.
Cars built at Canadian plants depend heavily on parts from US suppliers, which employs more than half a million Americans.
And Canadians bought about 663,000 cars built at US assembly plants last year, according to research firm Mobility Global. Canadian buyers also spent more than three times as much on larger, more expensive vehicles — heavy trucks, buses and special purpose vehicles — than American buyers.
At a press conference Monday, Canadian Prime Minister Mark Carney raised the specter of US job losses due to Trump’s auto tariffs.
“What message does that send to the workers in Michigan and Ohio, and Kentucky and Alabama, who rely on Canadian demand?” he said. “We’re their largest customer for automobiles.”
Most major automakers contacted by CNN either had no comment on the tariffs or did not respond to a request for comment.
Unifor, the union that represents Canadian auto workers, blasted the planned tariffs, calling them an “intimidation tactic.”
“The US administration fails to recognize that our highly integrated auto industry means ongoing instability hurts workers on both sides of the border and makes it increasingly difficult to build cars in North America,” the Canadian union said. “We need to resolve this, together.”
CNN’s Max Saltman contributed to this report
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