‘Over the longer term, the assembly plants will suffer and eventually disappear,' says expert
Canadian HR professionals in manufacturing and supply-chain sectors should watch this week's Canada-U.S. trade talks closely, as the outcome could determine whether more auto assembly plants idle or close, with labour leaders now warning Ottawa against further concessions ahead of Wednesday's deadline.
Negotiators in Washington are working to reach a deal before U.S. President Donald Trump's threatened 50-per-cent tariffs on a range of Canadian goods take effect. The U.S. has offered to cut its tariff on Canadian-built cars to 15% from 25%, exempting U.S.-made content. Canada has countered by seeking tariff-free treatment for all North American content, The Globe and Mail reported.
Prime Minister Mark Carney said this week Canada's goal is to resolve all of Mr. Trump's sectoral tariffs, including autos, before Wednesday's deadline, warning Canada would "get tougher" if talks fail, according to the report.
Canada's trade minister and the top American trade negotiator held a fifth round of virtual talks Sunday, described by Dominic LeBlanc's office as "constructive," just three days before a 50% U.S. tariff deadline is set to take effect.
Two in five exporters sell products that would be hit by the proposed U.S. tariff, with more than three-quarters of those firms expecting revenue declines, the Canadian Federation of Independent Business (CFIB) previously noted.
Industry warns of profitability threshold
Greig Mordue, an associate professor at McMaster University and former Toyota Canada general manager, told the Globe that a 15% tariff on non-U.S. content translates to an effective rate of roughly 7% to 8%, comparable to the labour cost of building a vehicle.
"Over the longer term, the assembly plants will suffer and eventually disappear," he said, according to the report from The Globe.
Plant closures are already under way. Unifor has said Stellantis NV is in talks to sell its Brampton, Ont. plant, idle since 2023 with about 2,200 workers on layoff. General Motors closed its Ingersoll, Ont. electric-van plant last year, and Ford idled its Oakville, Ont. facility in 2024, according to the report.
Labour sharpens its position
Lana Payne, national president of Unifor, said Friday Canada should hold firm. "We shouldn't be offering any concessions to the United States right now," she said, warning that without a deal by Aug. 19, "there is only one path for Canada... and that is to retaliate," according to The Globe.
In a separate Globe report, Payne warned that conceding now would invite further U.S. demands. "If you give concessions, the government in the U.S. will come back looking for more and more and more and more," she said, adding that writing auto tariffs into a formal agreement "will guarantee long-term plant closures and layoffs".
Meanwhile, Prime Minister Carney has recently announced the signing of the largest clean energy investment in North American history.
On Monday, Carney, alongside the Premier of Québec Christine Fréchette, the Premier of Newfoundland and Labrador Tony Wakeham, and the CEOs of Hydro-Québec and Newfoundland and Labrador Hydro, announced an agreement to upgrade and expand the Churchill Falls Generating Station and develop the Gull Island project and related transmission, building one of the largest electricity projects in North America.
As part of this agreement, the federal government will provide $10 billion in federal financing to:
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Upgrade and expand the Churchill Falls Generating Station.
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Develop the massive Gull Island hydroelectricity project.
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Unlock co-investment opportunities with the Innu of Labrador in a major new Labrador onshore wind project.
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Build associated transmission lines.
“Together, these projects represent the largest clean energy investment in North American history, at nearly $70 billion. They will generate 14,000 megawatts of clean, renewable power – nearly tripling the current generating capacity of Churchill Falls,” according to the Prime Minister’s office. “That is enough power to light, heat, and cool all the homes in Toronto, Montréal, and Vancouver combined. These projects will support 23,000 jobs – from the skilled trades to engineering – and contribute $31 billion to Canada’s GDP through the early 2040s.”
