President Trump today announced 25% tariffs on all cars, light trucks and certain auto parts made outside of the U.S., a much wider scope than automakers had expected.
The levies go into effect on April 2.
The tariffs have the potential to devastate the entire auto-making and auto parts-making industry in Canada. It employs about 500,000 people, and accounts for about 10 percent of the country’s manufacturing gross domestic product. About 80 to 90 percent of Canada’s production is exported, and since an auto trade deal in 1965 Canadian factories have been scaled to supply the U.S. market. It would be impossible to operate existing factories only for the Canadian market.
One Republican who outright opposed Trump’s new tariffs was Senator Rand Paul of Kentucky, who has frequently spoken out in defense of free trade and called the new 25 percent levies “a mistake.”
“I think it’s a terrible idea,” Paul said, adding that it will be “bad for the economy” and “raise the price of cars.” He pointed out that the markets already slumped before Trump signed the order. “Trade is good for our country and good for prosperity.”
While Ford Super-Duty trucks are assembled in Kentucky, the 6.8L and 7.3L gasoline engines are sourced from Windsor, Canada and the Power Stroke 6.7L diesel engines come from Ford’s Chihuahua Engine Plant in Mexico. Ford developed its supply chain based on the USMCA and invested presuming that President Trump negotiated a solid agreement in 2018.