Onautos,tariffwar meanstrouble:experts

RETALIATE OR NOT? CANADA ’ S TOUGH DECISION IN THE EVENT OF U.S. TARIFFS ON AUTOS

Industry leaders say the federal Liberal government will face a complex decision — with deep economic consequences — if the U.S. makes good on its threat to slap 25-per-cent tariffs on Canadianmade cars and trucks.

Ottawa recently retaliated against U.S. President Donald Trump’s levies on Canadian steel and aluminum with reciprocal duties on American sales of the metals, as well as dozens of U.S.-made consumer products.

However, if Canada’s auto sector does indeed become a Trump target, many fear any Canadian countermeasures would have a far greater impact on jobs and the economy in this country than the fallout from the steel and aluminum tariffs.

The chief economist of the Canadian Automobile Dealers Association is urging the federal government to resist retaliatory tariffs on autos, saying matching reprisals would put up to 30,000 jobs at risk in Canada’s retail sector.

The biggest threat for car dealerships, which employ more than 150,000 people in all corners of the country, would be retaliatory moves by Ottawa, Michael Hatch said Thursday.

“We understand, obviously, the pressure to respond in kind is intense, even though in a trade war the guns aren’t pointed at the enemy, they’re pointed at ourselves,” said Hatch, who will release a report today that outlines impacts to the auto industry and the economy if the “catastrophic” tariffs are imposed on both sides of the frontier. “The worst-case scenario is a titfor-tat.”

The Trudeau government has signalled it’s prepared to quickly respond to any U.S. auto tariffs with duties of its own. Foreign Affairs Minister Chrystia Freeland has said repeatedly that the federal strategy on tariffs is to neither back down nor escalate the dispute.

Ottawa could be forced to make that difficult call soon.

Many observers believe Trump will be in a position to make a decision as early as next month following the conclusion of a U.S. Department of Commerce investigation into the possibility of introducing auto tariffs on national security grounds. It is the same argument Washington used to deploy its steel and aluminum duties.

Flavio Volpe, president of the Auto Parts Manufacturer’s Association, said even though the impact of retaliation would be devastating to the auto sector, Ottawa would have no choice but to take precisely the same measures against the U.S.

That’s the message he has been sending to Freeland and Prime Minister Justin Trudeau.

“Donald Trump is a classic, textbook bully — he’ll threaten based on his assessment of a size difference, hoping you’re going to back down before he’s got to throw a punch,” Volpe said Thursday.

“If you’re going to get punched by the bully, you have to stand — you can’t run.”