The Canadian auto industry is bracing for the impact of 25 per cent tariffs that U.S. President Donald Trump says will be imposed on fully assembled vehicles made outside the U.S. after April 2.
Prime Minister Mark Carney said Thursday that he will wait until after April 2 to respond to the tariffs.
While the immediate impact will be felt by the Canadian auto manufacturing industry, dealerships in Central Alberta are keeping a close eye on the situation.
Lacombe Ford CEO Darren Gagnon says the majority of the vehicles they sell are manufactured in the U.S.
"The vehicles we have and sell here will only be affected if Canada imposes tariffs on vehicles from the United States," he said.
Gagnon says his big concern is if the U.S. decides to place a tariff on parts.
Trump has threatened to impose a 25 per cent tariff on some auto parts made outside the U.S. in May, potentially leading to all parts facing tariffs.
"Once they start tariffing all the vehicles and all the parts that go into the vehicles, and all the moving, that's when there will be a massive cost increase to the consumer for the end vehicle, because a part can go back and forth across the Canada-U.S. border three or four times and the Mexico border as well," said Gagnon.
He notes automakers have already increased the base price of almost all vehicles in anticipation of a trade war between the U.S. and Canada.
"I know that Ford Motor Company Canada and Lacombe Ford have both been planning for this for a couple of months, ramping up inventories and getting things here before tariffs affect the prices for consumers today," Gagnon added.
The best-case scenario, according to Gagnon, is that vehicles remain tied to the existing free trade agreement. The worst-case scenario is that tariffs will be applied to all parts and fully assembled vehicles.
"Experts say the automotive industry in North America could shut down within two weeks," Gagnon concluded.
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