Battle on the Border: We'll Fire Back If You Pull the Trigger, Canada Tells U.S.

The thought of the U.S. imposing an import tax on Canadian vehicles and auto parts was once unthinkable, but the possibility now exists. Unable to ignore it any longer, Canada now says it will impose tariffs on American-built vehicles should the U.S. act first.

Canada’s contribution to the continent’s automotive landscape isn’t what it once was, but it’s still formidable when viewed in isolation. The Great White North, which continued building Studebakers for two models years after South Bend went dark, houses assembly plants operated by the Detroit Three, Honda, and Toyota.

With the glaring exception of pickup trucks, Canada would find itself with a (limited) crop of remarkably practical tariff-free vehicles if the taxes went into effect.

“Should this investigation ultimately result in the application of tariffs on autos, Canada will once again be forced to respond in a proportional manner,” said Kirsten Hillman, Canada’s deputy ambassador to the U.S., in a statement made at Thursday’s Commerce Department hearings.

“Maintaining open trade in autos and auto parts between our countries is crucial to the economic well-being of our companies, our communities and our workers, which, in turn, supports our collective security. We urge you to reflect on these matters as you prepare your recommendations.”

As we told you yesterday, automakers and industry groups have come out against the possibility of auto tariffs levied in response to a perceived national security threat. There’s just too much that goes into building a car. Even domestic automakers stand to see price increases on U.S.-made vehicles should the U.S. impose tariffs, which could run as high as 25 percent.

Hillman said it doesn’t make sense that Canada’s automotive landscape could pose any threat to the United States. She added that in the event of war or an attack, U.S. planners have always looked at Canada as a source of reserve capacity.

Over 50 percent of vehicles purchased in the U.S. are made in the U.S., either by domestic manufacturers or the plethora of foreign companies operating on American soil. In contrast, only 11 percent of U.S.-bought vehicles are built in Canada. While the country north of the border would get the short end of the stick, no one would come away unscathed. Suppliers like Magna International, headquartered near Toronto, stand to be hard hit as well, but so too would the companies using its products. Then there’s the engines, transmissions, and other components manufactured by OEMs on the Canadian side of the water.

The saber-rattling might end up being a big bluff, and the Canadian contingent no doubt hopes it is. Canadians get the majority of their vehicles form the United States.

Currently, Ford builds the Ford Flex, Edge, Lincoln MKX, and MKT in Oakville, Ontario. General Motors builds the Chevrolet Equinox at the CAMI plant in Ingersoll, Ontario, but it also builds it in Mexico. That plant lost the GMC Terrain when production of the second-generation model moved south of the Rio Grande. In Oshawa, GM builds the Cadillac XTS and Chevrolet Impala, but the former model isn’t long for this world and the latter is also built at Detroit-Hamtramck. Oshawa also performs final assembly of the outgoing generation of Chevrolet Silverado and GMC Sierra light-duty pickups.

No such country-of-origin variety for FCA, though. Its Windsor, Ontario plant is the sole builder of the Chrysler Pacifica and Dodge Grand Caravan, and its Brampton facility cranks out Chrysler 300s, Dodge Chargers and Challengers under a fluttering red maple leaf.

North American Toyota RAV4 production calls Canada home, and a portion of the continent’s Corollas can claim the same — though not for long. The automaker plans to move all Corolla sedan production to a new joint Toyota-Mazda facility in Alabama in a few years’ time. Also Canadian-made are the RX350 and RX450h crossovers. (Japan builds them, too, but it’s hard to imagine an auto import tax that impacts Canada but not Japan. The same sentiment goes for Mexico.)

Honda builds its biggest breadwinners, the Civic and CR-V, at the automaker’s two Alliston, Ontario assembly plants, but you’ll also find them built in the States.

[Source: CBC] [Image: Fiat Chrysler Automobiles, General Motors]