Oshawa Mayor Dan Carter says he’s hearing optimism from officials in the local auto sector despite the United States imposing 25 per cent tariffs on all foreign-made automobiles, a move that could have significant consequences for Ontario’s economy.
Carter made the comment in an interview with CP24’s Leena Latafat on Thursday afternoon, hours after Prime Minister Mark Carney announced that Canada would retaliate with a 25 per cent tariff on U.S. made vehicles that fall outside of an existing North American free trade pact.
The auto industry is a significant driver of Oshawa’s economy, with more than 3,000 employees working at a GM assembly plant in the city and thousands of others working in jobs indirectly related to the auto sector. Across Ontario an estimated 100,000 people work in the auto sector.
“Believe it or not, I’m hearing optimism,” Carter said. “We don’t know all the details in regards to yesterday’s announcement… I’m trying to make sure we gather as much information as possible. I can only speak about here in Oshawa, but I feel optimistic about where we sit at this particular moment.”
Vehicles that are assembled in Canada will only be taxed based on the portion of their parts that are foreign-made, something that Ontario Premier Doug Ford has suggested could ultimately cut the tariff in half on most vehicles.
Ford, however, has said that any tariffs on Canadian made vehicles are “unacceptable.”
On Wednesday, Stellantis announced plans to pause production at a plant in Windsor for two weeks amid the uncertainty but General Motors has not yet taken any action to curtail production in Oshawa.
Speaking with CP24, Carter said that he believes Oshawa in positioned to withstand this moment in time, pointing to the city’s experience weathering previous trade tensions, including U.S. President Donald Trump’s 2018 efforts to pull auto manufacturing back into the U.S.
However, he cautioned that the situation “is going to change day to day” and that officials need to “take a step back, understand what the impact will be, and put a plan together.”
“We are in a unique position. I’m glad to hear the prime minister and the premier speaking in regards to the impact on the auto industry. It plays an important part in Ontario and across Canada,” he said. “Both UNIFOR and General Motors have had a long history, and they’ve had challenges throughout, but they found a path forward, they found solutions. You can throw everything at us, but we know what we do well, we’re going to continue to fight and move forward.”
Industry experts warn of price increases
While Carter says that he remains optimistic about the future of the auto industry in Oshawa, industry experts warn that tariffs could drive up vehicle costs on both sides of the border.
“If tariffs go through, there’s going to be an increase in new car prices,” Baris Akyurek, AutoTrader’s VP of Insights and Intelligence, told CP24.
Akyurek noted that while supply chains may not see immediate disruption, affordability will become an issue for consumers.
“Within the 47 per cent of consumers who stated tariffs would have an impact on vehicle purchase decisions, 30 per cent said they would switch to used vehicles,” he said, citing a survey his team conducted earlier this year.
However, he said that the used car market is already strained “in terms of availability.”
With Canada importing more than 800,000 new vehicles from the U.S. annually, Akyurek warned that retaliatory tariffs could create further supply challenges.
“If you remove 800,000 from the equation, where are all these cars going to come from?” he asked.
The need for a long-term strategy
Greig Mordue, an associate professor of engineering and chair of advanced manufacturing policy at McMaster University, said Canada must be careful in its response.
“We shouldn’t throw the baby out with the bathwater,” Mordue said. “We’ll have to see how this thing shakes out.”
He suggested Canada should diversify its trade relationships and consider alternative markets.
“We have to start, if we didn’t already, to think about different relationships or different forms of our success, and that means looking at the U.K. and the E.U.,” he said.
That said, Mordue acknowledged that shifting trade focus is no simple task given the structure of the North American auto sector.
“Our industry is designed to avoid an 82.5 per cent tariff going into the U.S. market,” he explained. “We do that by having 75 per cent American content in the vehicles we produce.”
