Canada's auto industry braces for slump in US sales

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Canada's auto industry braces for slump in US sales

2025-03-02 03:11 Last Updated At：19:27

Canada's auto industry is gearing up for a significant downturn in U.S. sales as the specter of U.S. tariffs on Canadian goods looms closer.

Economists are sounding the alarm, highlighting the potential devastating effects of the impending 25-percent tariffs on the Canadian economy, particularly hitting sectors like the auto industry hard.

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Canada's auto industry braces for slump in US sales

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Canada's auto industry braces for slump in US sales

Oshawa, a city adjacent to Toronto, boasts a rich automotive manufacturing heritage, showcased at the Canadian Automotive Museum. The legacy of the McLaughlin Motor Car Company, which commenced car production in 1907, laid the foundation for the region's early automotive success.

Today, the expansive General Motors plant in Oshawa churns out Silverado trucks, symbolizing a modern chapter in the city's automotive history. However, anxiety grips workers across Canada's auto sector as uncertainty looms.

U.S. President Donald Trump's tariff threats on all Canadian goods, including American brands manufactured in Canada, have cast a shadow of doubt over the industry's future.

"I'll say this past four years probably been the best four years we've had, I've had. Now we have discussions or talks of proposed tariffs. And it's a lot of 'what's going on,' 'what's going to happen to us' on the floor," said Jason Gale, chairperson of the Unifor Local 222.

The auto industry stands as a pivotal economic powerhouse for Canada, generating over 50 billion U.S. dollars in exports, with a staggering 93 percent directed towards the U.S. market.

David Soberman, a professor at the Rotman School of Management, University of Toronto, emphasized the dire predicament facing the Canadian economy and its workforce.

"Seventy percent of our trade goes to the U.S., probably between three and 400 billion dollars a year. And certain sectors especially are extremely integrated, and the automobile sector is one of them. It just doesn't make any economic sense, and it's going to be extremely difficult for the Canadian economy, but also for Canadian workers," said Soberman.

For workers at these plants, the threat of U.S. tariffs evokes profound concern. The looming tariffs could potentially disrupt the auto industry, leading to potential job losses and economic upheaval.

"The people that are building the vehicles, they're going to be out of work almost immediately, and then we're going to have to figure out how to get them back to work and how to keep the industry running. We all have mortgages or rent, we have food, we need to buy utilities. None of that's stuff that doesn't stop because you lost your job," said Gale.

Escalating Middle East tensions drive up energy prices, squeezing US consumers

Soaring oil prices triggered by escalating tensions in the Middle East have heightened U.S. inflation pressures, with analysts warning that households face hundreds of dollars in extra costs if crude climbs further.

Data released on Tuesday by the American Automobile Association (AAA) showed that the national average price of regular gasoline in the United States has risen 18.64 percent compared with Feb. 26. The AAA data also indicated that the national average price of diesel on Tuesday was up 22.85 percent from a week earlier.

Mark Zandi, chief economist at global ratings agency Moody's, warned that U.S. consumers are being threatened by a sharp rise in fuel prices. He said that if international oil prices climb by another 10 U.S. dollars per barrel, annual spending for an average U.S. household would increase by about 450 dollars.

Zandi noted that a surge in oil prices would intensify inflationary pressure in the United States, eroding consumers' purchasing power and weighing on consumption, economic growth, and employment.

Tensions sharply escalated across the Middle East on Feb 28 when the United States and Israel launched large-scale joint airstrikes on Iran. The Iranian side has responded with multiple waves of missile and drone attacks targeting Israel and U.S. assets across the region, hitting many countries in the Gulf.