Until January, polls suggested that the Conservatives would regain power from the Liberals in the Canadian elections held this year.
Trump's Trade War
Trump has been pulled back from the threat of all tariffs imported from Canada, but has imposed several measures that clash with key sectors of Canada's economy. Same for 25% tariffs on automobiles, aluminum and steel, as well as Canada's exports that are not qualified as North American goods under the US Mexico-Canada Agreement. The 25% auto parts duties are expected to come into effect on Saturday.
Last week, Trump suggested that automobile tariffs cut based on US content could increase. He did not provide details.
Automotive Parts and Automotive Parts are Canada's largest export to the US, outside of oil and gas.
Canada is hit
Under Canadian Trudeau, it is expected to set up retaliatory tariffs on US goods coming to Canada, generating approximately $22 billion in revenue over the year.
After becoming prime minister in March, Mark Carney levied around $5.7 billion in Canadian dollars (approximately $5.7 billion), including a 25% tax on cars made in the US, but not auto parts. Automakers with assembly lines in Canada can primarily bring in tax-free American-made cars from these brands.
Canadians also responded. Travel to the US is declining sharply. Liquor stores owned by governments in several states have removed American beer, wine and whiskey from their shelves. Looking for a boycott of American products, the Canadian manufacturer was rushing to decorate the packaging with Canadian leaves and Canadian flags.
How to deal with playing cards
Carney, who took over Trudeau as Liberal leader, and Pierre Polyeill, the Conservative leader and other leading candidate in the election, took a tough line when it comes to the US president.
In a conversation with Trump in March, Carney said the president agreed to launch economic and security negotiations with those who appear as prime minister. In these talks, Kearney said during a TV discussion that “the starting point must be one of strength.”
He added:
Through the campaign, Carney, who was governor of the Bank of Canada and later the Bank of England, sought to emphasize that his background in the financial world would be an ideal candidate to tackle both Trump and his tariffs.
When asked how Trump would deal with him, Trump's Polyeve responds that he would usually be the first to tackle what he considers as a problem he has created within Canada.
“We're going to be able to face President Trump from his position of strength so that he can cut taxes, reduce deficits, approve resource projects and get products to market and take jobs back,” he said in the discussion.
The crisis will probably get worse
Trump's car rates had an immediate impact. The Windsor, Ontario factory, where Stellantis manufactures Chrysler minivans and muscle cars that he shunned, was closed for two weeks, and the company considered its options. The Auto Parts Manufacturers Association said its members have already fired thousands of workers in Ontario.
There were also a handful of layoffs in the steel industry.
Threatened tariffs on auto parts may have a profound effect. Auto parts manufacturers employ more people than automotive manufacturers' assembly lines. Many parts companies are incomplete, and sometimes family-owned businesses, with the financial resilience of multinational car manufacturers.
It's an economic idea, but there are very few details
Both leaders, particularly Poilierbre, are promoting the construction of oil and gas pipelines to make fuel easier to transport into Europe. They do not provide details on which companies are interested in those projects or how they will be funded.
Poilierbre also said it would accelerate the environmental review and consultations with Indigenous groups for the natural resource project. Environmental groups and Indigenous leaders have criticised the proposal and questioned its legality.
For the automotive sector, Kearney proposed to create an “all-in-Canada” system where cars can be assembled in Canada using Canadian parts made from Canadian steel and aluminum. He hasn't said any way to convince the carmaker to go along with the plan.
Carney also pledged to secure C$2 billion to help the auto industry adapt to US tariffs, and vowed that money raised from retaliatory tariffs will be used to support businesses and workers destroyed by the trade war. He doesn't specify what the help includes.
