Trump team signals auto border tax could also hit Canada

Move may hurt industry more

The Trump administration is signalling Canada could face the same retaliatory trade measures as Mexico, in what would be an even bigger disruption to automakers such as Toyota and Fiat Chrysler.

Asked whether an auto border tax could impact Canada, U.S. president-elect Donald Trump’s spokesman, Sean Spicer, told reporters their policy isn’t specific to any one country.

“When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico, or any other country seeking to put U.S. workers at a disadvantage,” Spicer said on a conference call Friday, then Trump “is going to do everything he can to deter that.”

Any move to thwart imports from Canada would be a more severe impediment to the North American auto sector than sanctions against Mexico, since the industry’s links with the U.S.’s northern neighbour run deeper.

Assembly in Canada, which along with the U.S. is a higher-cost producer than Mexico, is focused on the more profitable and faster growing light-truck and sports vehicle segment of the market.

“Canada is building a lot of vehicles that are in demand,” said Kevin Tynan, a senior auto analyst for Bloomberg Intelligence.

Through October, the U.S. imported US$37 billion worth of passenger cars from Canada last year, a 12 per cent increase, according to Bloomberg Intelligence. That compares with US$19 billion in imports from Mexico, which have been on the decline.

Michigan- based automakers such as Ford often ship parts back and forth across the border to factories in Ontario, and made commitments to invest in Canada earlier this year while finishing union contract negotiations.

Border taxes would hurt both nations, says Linda Hasenfratz, chief executive officer of Guelph, Ont.based auto-parts maker Linamar Corp. “We are trying to be globally competitive” in North America against overseas rivals, she said Wednesday on Bloomberg TV Canada. The industry is “intertwined” with “parts going back across the border multiple times.”

The auto industry is global in nature and all vehicles contain a percentage of non-domestic content, Toyota spokesman Aaron Fowles said in an emailed statement.

This type of tax will have an impact on every part and product that is imported to the U.S., which means that prices for all vehicle makes will increase, according to the statement.

Prime Minister Justin Trudeau’s government has pledged to work with the new administration and renegotiate the North American Free Trade Agreement.