“There is⁤ no valid economic reason to do it; it makes no sense; it is indeed madness,” said one expert specializing in the automotive sector. He expressed ​concern that imposing ⁤an additional 25% customs duty on cars‌ not made in the U.S. would ⁤have ​devastating effects across the industry.

The expert​ argued⁤ that targeting trade partners undermines a crucial element of competitiveness against European and Asian rivals: the ‌integration of industries across North America.

“As a historian, I‌ do not see another moment⁣ in economic history when a goverment has inflicted an economic policy at this ⁢self-destructive‌ point.The ⁣only comparison I have in mind would be Brexit, which was‍ absolutely not necessary and which cost the British very dear. But there, it’s much worse than Brexit.”

The expert ‌believes the⁣ tariffs ⁣could cripple⁤ the automotive industry. “I really hope to be wrong, but you know, it is not I who say it, it is all the players in the sector who keep repeating that it will​ be bad for everyone.”

The‍ CEO of a‌ major American manufacturer has also voiced concerns. He stated that tariffs and policies discouraging electric vehicles would lead⁤ to considerable costs and widespread disruption, perhaps creating “an unprecedented void in‌ American industry.”

Potential Consequences in Canada

The Canadian Association of Vehicle Manufacturers (ACCV) anticipates that a 25% tariff could lead to work stoppages in Canada. While ‌the exact number⁢ of jobs at ​risk remains uncertain, the ACCV foresees​ slowdowns and potential production halts on both sides of the border.

The Canadian automotive industry, responsible for approximately 130,000 direct assembly jobs ‍and 500,000 direct and indirect jobs, could face notable damage. Last year,Canada⁣ manufactured over 1.5 million vehicles,​ with⁤ more than 90% exported to the U.S. The ACCV reports that the automotive sector is Canada’s second-largest export, contributing over $50 billion to the economy.

A 25% tariff on cars and parts, potentially implemented in April and May, respectively, could ⁤severely ⁢impact the Canadian economy beyond the automotive sector, ultimately leading to increased vehicle prices for consumers.

The “Snowball” Effect

One strategy professor estimates that tariffs could increase vehicle prices by ⁤up to $15,000, depending on the model. He ⁣suggests that decreased demand ⁢in the American market would impact production, forcing factories in both the U.S.and Canada to slow down.

“Regrettably, this ⁢drop in activity will not be offset by an additional activity in the United States, as many production plans were organized across North America. In addition, the prices that will⁤ apply on all the parts from May 3​ will‍ ensure that supply ‌and assembly channels could end up ⁤at a stop,” the professor said, fearing a snowball effect across related sectors.

The professor ⁢also cautioned about potential retaliatory measures from Canada and the European Union, which could further impact American vehicle production outside north America.

“We ​are at the beginning of⁤ a ‍perfect⁣ storm.A storm in which there will only be⁤ losers,” he stated.

Concerns about the‍ tariffs have already⁤ impacted the stock market. On a recent Thursday, General Motors shares fell nearly 8%, closing down⁢ 7.4%. Ford experienced a 1.71% loss, while Stellantis, owner of Chrysler, saw a 3.6% decline before closing down 3.9% and 4.2%, respectively.

China’s‌ Potential Advantage

While the North American automotive sector faces uncertainty, China could ⁣potentially benefit. American protectionism could allow beijing ‌to gain an advantage, especially if other countries‌ respond to American tariffs.

The strategy professor ⁢questioned the future of Canada’s 100% surcharge on electric vehicles made in China, implemented ⁤in October 2024. ⁢“Originally, these 100% prices had been imposed in solidarity with the americans, to save our integrated industry. From now on, we can ask ourselves the question,” he said.

“Canada must‌ refocus its foreign policy around⁤ its interests‍ rather than around its ‍values. Concretely, that means that we will have to get⁢ closer‌ to China, which is perhaps one of the keys to the equation.”

The professor believes Canada should proactively seek a role in the ​evolving global automotive production landscape. he suggests that Canada could explore partnerships with⁢ other countries, including China, and leverage trade ​agreements with Europe and Pacific nations to create new opportunities.

“You have to be creative now, but without burning ​bridges with the United States and our industrial tradition. We must work hard to‍ maintain our⁤ footprint,​ but without being embarrassed to develop elsewhere than in North America.”