Donald Trump said this week that he intends to impose auto tariffs “in the neighbourhood of 25 per cent,” with similar duties on semiconductors and pharmaceutical imports. He said the auto tariffs could come as soon as April 2, one day after his cabinet is set to deliver reports outlining his options.
A University of Toronto professor and business history expert, Dimitry Anastakis, warns this could create a perfect storm of economic instability and rising prices that could require months if not years of recovery. Here’s what to know.
How will Trump’s 25% auto tariffs impact Canadians?
“There’s going to be higher prices, and you’re going to have fewer choices,” said Anastakis, long-time holder of the L.R. Wilson and R.J. Currie Chair in Canadian Business History.
“It would effectively be what we had during 9-11, and during the great recession (of 2008) when the automotive industry came to a standstill,” he said in an interview with the National Post. “And what happened during COVID, when there was effectively a stoppage of the the flow of automobiles.”
He added: “It would impact the prices, the selection and the availability of vehicles, and the overall health of the automobile industry. On the consumer side of things you would see the price of cars increase dramatically, and you probably would see the selection of vehicles decline as well.”
Could the threat of U.S. tariffs have been prevented?
Yes. Anastakis is incensed at the talk of automobile tariffs because, unlike a pandemic, a terrorist attack or an economic downturn, it is entirely preventable.
“This is a greater own goal than Brexit, if he were to pursue this,” he said, noting that the pain will be felt on the U.S. side of the border as well. “If Trump had just not done anything, if he hadn’t been the chaos agent, if he had just let things happen … we would be much further along on this transition towards an EV future, and the Americans wouldn’t lose the competition for that EV future to the Chinese, which they are now going to do.”
He added: “There’s a good chance that we’re all going to be driving Chinese-made vehicles in 20 years.”
How would a semiconductor tariff affect the auto industry?
Anastakis recalls his own purchase of a new vehicle in 2021, during the pandemic. The dealer informed him that his choices were limited, due to a shortage of semiconductor chips.
“A lot of it was around chips. And Trump has also said he wants to raise the import costs of chips by 25 per cent. It’s a basic situation like we had during COVID, where there weren’t enough chips to go around.”
He continued: “That’s going to happen all throughout the system on regular parts. Consumers are just not going to have the same amount of choice, and the costs are going to go up.”
Is there anything consumers can do to soften the blow?
“Not really,” said Anastakis. “Was there anything auto purchasers could do to mitigate what was going on during COVID? You’re going to see the industry crawl to a halt.” Some have at least pointed out a potential upside in that stalled sales might drive down the price of used cars.
As for buying Canadian, “well, you can’t really buy Canadian because it’s integrated.” He said that only a handful of vehicle types are manufactured in Canada, and even those use a large number of parts from America.
“We only build 14 vehicles in Canada. And we purchase 300. So we’re getting all those cars from somewhere else.”
Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark nationalpost.com and sign up for our daily newsletter, Posted, here.