What a week it has been. On September 8th, Canada’s dollar-for-dollar response to the latest round of U.S. tariffs on Canadian exports. And almost as quickly, the United States began signalling that there could be more to come.
For businesses north of the border, and particularly those of us in the automotive sector – it is another reminder of just how quickly the economic landscape can change.
Only a few weeks ago, Canada and the United States appeared to be moving toward an agreement that could have eased some of the pressure created by months of tariffs and uncertainty. Instead, those negotiations collapsed. The United States imposed another major round of tariffs – and Canada responded.
In other words, we are no longer talking about the risk of an escalating trade war. We are in one. For Canada’s new-car dealers, that matters.
It would be easy to look at automotive tariffs as primarily an Ontario manufacturing issue. Most Canadian-built vehicles come from Ontario, after all. But the North American automotive industry simply doesn’t work that way.
It is one of the most integrated manufacturing and supply-chain systems in the world. Parts and components can cross the Canada-U.S. border several times before a finished vehicle arrives at a dealership.
When tariffs are imposed on steel, aluminum, parts, components and finished vehicles, costs can accumulate throughout that system. And eventually somebody has to pay.
That is why what happens in Washington and Ottawa matters just as much to a dealer in Prince George, Kelowna, Victoria or Vancouver as it does to an assembly plant in Ontario.
BC’s new-car dealers employ thousands of people, invest significantly in their communities and serve consumers who are already facing serious affordability pressures.
Those consumers ultimately care about a relatively straightforward question: What is this going to cost me? Unfortunately, that is becoming increasingly difficult to answer.
Tariffs can affect production decisions, vehicle allocation, supply chains, pricing and consumer confidence. Just as importantly, uncertainty itself has a cost. Businesses make investments and hiring decisions based on some reasonable expectation of what the rules will be tomorrow, next month and next year. Right now, that certainty is in short supply.
There is another important point in all of this. Canada did not start this latest round of escalation. The federal government spent months negotiating with the United States before talks broke down and Washington imposed its latest tariffs. Canada has now chosen to respond rather than simply absorb those measures.
Whether one agrees with every product targeted or every element of the response, there is a broader principle at stake: Canada has to be prepared to defend its economic interests.
At the same time, nobody should confuse retaliation with a desirable outcome. A prolonged cycle of tariff followed by counter-tariff followed by another tariff is not a victory for either country.
Canada and the United States remain deeply interconnected trading partners. Nowhere is that more obvious than in the automotive sector, where our supply chains, workers, manufacturers, dealers and consumers have been connected across the border for generations.
The objective therefore has to remain a negotiated solution that restores greater certainty and preserves the enormous benefits of North American trade.
But after a week like this one, nobody should underestimate what is at stake or assume that the next move from Washington will bring greater certainty.
If anything, the crystal ball just became cloudier.
Blair Qualey is President and CEO of the New Car Dealers Association of BC. You can email him at [email protected].
