Accepting US auto tariffs may be death blow to some Ontario assembly plants

The value of vehicle shipments was already down, with several plants idle now or soon. Accepting U.S. auto tariffs may mean some never reopen.

Output from Ontario’s auto assembly plants is well down, this June shipping less than $3.5 billion in vehicles, according to Statistics Canada data released August 18.

On Friday, Canada dropped the fight against the U.S. auto tariff, risking more closures of at-risk assembly plants that bleed into the parts industry.

At the Stellantis Assembly Plant in Brampton, which built over 200,000 Chargers, Challengers and 300M vehicles in 2023, nothing has rolled off the line in almost two years. A plan to retool then restart production is on indefinite hold.

The last vehicle from Ford’s Oakville assembly plant also rolled off in 2023. In 2024, a plan to retool and restart production in 2025 was cancelled. Now the plan is to restart assembly in 2026. The good news is retooling is ongoing. Fingers crossed.

In May, GM announced the three shifts assembling Silverado trucks in Oshawa will be cut to two this fall. The same vehicle is assembled in four U.S. plants. Some are hiring as Ontario workers get layoff notices.

This spring GM also announced production cuts at its Ingersoll plant and ann idling of operations in October. The company still plans to restart production in 2026.

Carney’s “CUSMA-compliant” talking point created by Trump

For now, Ontario’s four other assembly plants, in Windsor (Stellantis), Cambridge (Toyota), Woodstock (Toyota) and Alliston (Honda), appear to have stable production commitments.

But with half of Ontario’s assembly plants facing uncertainties, Prime Minister Mark Carney’s decision to stop fighting and accept Trump’s auto tariff is being received as grim news by Unifor, the union representing autoworkers.

The prime minister two weeks ago began repeating Trump’s talking point that tariffs have been lifted on CUSMA-compliant goods. He was echoing a claim at odds with the facts.

On August 1 Trump replaced a 25 per cent general tariff on all Canadian imports with a 35 per cent general tariff that excepted goods covered by CUSMA.

But in no way did the change to the general tariff mean all CUSMA-compliant goods have become tariff-exempt.

Other tariffs — 25 per cent on autos, 50 per cent on steel, aluminum and copper — continue to apply to CUSMA-compliant goods.

When Carney two weeks ago decided to repeat the “CUSMA-compliant” line, clearly the decision to stand down had been made. All that remained was to time the announcement. A Friday mid-day press conference was scheduled with a trip to far-away Ukraine the next day.

Unifor: accepting auto tariff a “betrayal”

For Unifor, as long as Canada was fighting, the hope of a win was alive and Carney had just one job: get the auto tariff lifted. So it’s not surprising Unifor last week called it a “betrayal” that Carney has unilaterally accepted an auto tariff, as well as tariffs on CUSMA-compliant steel, aluminum and copper products.

Trump’s 25 per cent auto tariff doesn’t apply to auto parts manufactured in Canada if directly shipped to a U.S. assembly plant. But parts manufactured in Canada (or Mexico) are subject to a 25 per cent tariff when inside a Canadian-assembled vehicle.

Perhaps Prime Minister Carney can explain how CUSMA-compliant Canadian auto parts cease to become CUSMA-compliant once inside a CUSMA-compliant Canadian-assembled vehicle.

The 25 per cent import tariff on non-U.S. parts inside Canadian-assembled vehicles will tilt corporate calculations when selecting which assembly plant to award a new product. The currently idle Brampton assembly plant has now got to be at extreme risk of never re-opening.

Closing the assembly plants unanchors parts plants

And it’s not just assembly plant jobs under the gun. Carney cancelling retaliatory tariffs gave U.S parts an advantage over Canadian parts, even in Canadian assembly plants.

American-made parts can now be imported by a Canada assembly plant, tariff-free. Then, inside an assembled vehicle, they can be exported tariff-free. But Canadian parts inside a vehicle get tariffed.

And if assembly moves, parts will follow. Transportation costs and delivery reliability encourage feeder plants to settle around assembly plants. When the anchor is gone, parts jobs drift away.

Ontario’s auto industry has been taken for granted for a long time. As Canada’s second largest export sector, that attitude was unacceptable then. Now, after Friday’s fateful announcement, it is dangerous.