U.S. President-elect Donald Trump’s transition team says Canada will face tariffs if cross-border trade is seen to disadvantage U.S. workers.
The statement marks the first specific mention of Canada as Trump continues to take aim at the longstanding North American Free Trade Agreement (NAFTA), which he has called “the worst deal in history,” and deemed responsible for the erosion of the U.S. manufacturing sector.
The warning comes courtesy of Trump spokesperson Sean Spicer who issued the following statement Friday: “When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico, or any other country seeking to put U.S. workers at a disadvantage,” then the incoming administration “is going to do everything he can to deter that.”
Spicer’s comment adds to mounting uncertainty for Canada’s auto industry in the wake of the U.S. election. Trump’s promise to tear up NAFTA and the looming threat of protectionist trade policies threatens thousands of jobs at Canadian auto plants and parts suppliers.
Vehicles travel between Canada and the U.S. an average of six times during production. A punitive tax would take a big bite out of a multi-billion dollar business on both sides of the border.
One in seven Canadians is either directly or indirectly employed in the automotive industry, according to the Canadian Vehicle Manufacturers’ Association. The industry group estimates roughly 85 per cent of vehicle production in Canada, and 60 per cent of auto parts, are marked for export.
“We have a lot of jobs at stake,” Ian Lee, a professor at Carleton University’s Sprott School of Business, told CTV News.
Lee has been one of the leading voices warning that Trump’s election poses an existential threat to Canada because of the tight integration of the two neighbouring economies.
Canadian exports to the U.S. topped $524 billion in 2015, according to Statistics Canada, representing roughly one-third of the country’s Gross Domestic Product (GDP).
“He’s going to do everything possible to bring jobs back to the U.S. to benefit Americans. If we are run over in the process, that’s just unfortunate, we become roadkill,” Lee told the Business News Network last week.
Trump has taken aim at major U.S. companies such as General Motors Co. and Ford Motor Co. for planned expansions in Mexico, both of which have major manufacturing operations in Canada.
Prime Minister Justin Trudeau has said he is “more than happy” to talk about existing trade deals if other countries wish to reopen them. However, experts warn trade negotiations with the incoming Trump administration would be unlikely to favour Canada.
“It would be naïve in the extreme to think that their intention is to reopen it in order to improve it a little bit (for Canada),” said Gordon Ritchie, Ottawa’s former ambassador for trade negotiations and deputy chief negotiator of the Canada-U.S. free-trade agreement.
Canadian officials have been meeting with the Trump transition team, hoping to make the case that resorting to protectionism is not in the interest of either country. One study from the U.S.-based Center for Automotive Research suggests more than 30,000 American jobs would be lost if Trump imposed a border tax.
“NAFTA and economic partnership, and our trading relationship, benefits both the U.S. and Canada,” said Innovation, Science and Economic Development Minister Navdeep Bains.