How much will costs rise with U.S. auto tariffs? (Hint: It’s no pittance)

In the U.S., the base price of a Toyota RAV4 is about $24,500 (all prices in U.S. dollars). If Donald Trump continues to huff and puff and blow his house down with proposed tariffs, that same vehicle could cost as much as $33,861. Because many of those vehicles are made in Canada and exported to the U.S., he will blow our house down, as well.

We won’t just be caught in the crossfire of an international trade war, we’ll be in the crosshairs.

About 20 vehicle models that are sold in the U.S. are manufactured in Canada. If Trump’s proposed 25-per-cent tariff on that industry goes through, it would be a total disaster, according to Jerry Dias, president of Unifor, the union representing Canadian auto workers.

“Nearly 85 per cent of the vehicles we produce are exported to the American market. But he would destroy his own workers with these tariffs, too.”

That’s because many components — both small and major — used in Canadian-built vehicles from Chrysler, Ford, General Motors, Honda and Toyota are sourced from south of the border. That said, Dias thinks it unlikely the scenario will play out as threatened.

“Trump is playing politics ahead of the fall midterm elections,” he explains.

The reality of the economics wouldn’t just destroy our auto industry, it would wreak havoc on the American one, as well.

“Sixty per cent of the parts for our industry come from the U.S.,” says Dias. “Trump will have to address how thousands of laid-off workers there will be affected.”

And this is before tariffs applied from major steel suppliers such as China are factored

into the equation. Trump is tugging on a thread and threatening to unravel an entire sweater. If the world were a sweater.

“It’s playing well with the U.S. unions,” says Dias. “People may not realize, however, that the U.S. Steelworkers Union has more forestry members than steel; we need their steel for our cars, but they need our softwood timber more than ever. Fires and floods are taking their toll; these tariffs are coming straight down to the consumer.”

Those members cheering the tariffs would do well to remember just how many parts Canada buys, and how many Americans will be out of work, too. The damage will land everywhere, including on Trump’s own voters.

Dias notes that statements from American unions declare their support for Trump’s tariffs, but also include an asterisk: “except for Canada.”

Just how much would this tariff add to car costs? According to a recent study, in addition to that RAV4, four other Canadianbuilt vehicles are among the top 20 sellers in the U.S. The Honda CR-V would see a price increase of $2,454 to $3,075, the Chevrolet Equinox would rise by $6,131 to $8,499, a Toyota Corolla would cost $1,952 to $2,370 more, and

the Honda Civic would go up by $2,223 to $2,769.

Because we export the majority of what we make, our own prices would skyrocket as well.

Dias notes that auto manufacturers will wield the biggest stick.

“They won’t reward stupidity to make Trump happy. There will be zero investment unless they can base it on a sound business plan.”

Threats and tariffs are the opposite of sound, and billions of dollars in investments will either be parked or moved elsewhere. This is true for both sides of the border, which means Trump is poisoning his own well.

Automotive consultant Dennis DesRosiers is more blunt.

“This would be the most devastating economic event in the history of Canada,” he warns.

With one in seven jobs in this country tied directly or indirectly to the automotive sector, he warns the domino effect could result in a fallout worse than the Depression of the 1930s.

“Canadian vehicles make up 10 per cent of the American market. Add in Mexico and other markets he’s threatened, and you’re looking at 40 per cent of their market. The American industry at the dealer level alone employs

1.5 million people.”

Driving.ca