Auto Talks a Chance to Reinforce the Canadian Industry’s Lasting Potential

Canada’s auto industry is reeling from Donald Trump’s trade war. His 25% tariff on vehicles and some auto parts had immediate impact on Canadian vehicle production, employment, and exports, which all slumped badly after he imposed it last year.

But the longer-run threat facing auto is even worse. The tariff destroys the business case for making cars in Canada, given that 90 percent of our output goes to the U.S. – a geographic reality that has been true since the 1960s.

And that is exactly Donald Trump’s goal. He wants all North American production to relocate to the U.S. His Commerce Secretary Howard Lutnick put it bluntly: “Car assembly is going to be in America and there is nothing Canada can do about it.” Last month U.S. Trade Representative Jamieson Greer echoed that view, asking “Why do we make cars in Canada?”

Into this turbulent arena marched two negotiating teams last week: bargainers for Unifor, the auto union, and Ford Motor Company. The two sides kicked off triennial contract talks in Toronto, hoping to reach a new collective agreement for Ford’s 5000 Canadian workers by a July 10 deadline.

One might think this is a terrible time to negotiate a labour contract – with many workers on layoff, and uncertainty hanging thick. But given the unfortunate reality of Trump’s tariffs, stakeholders must deal with the world as it is, not how they wish it was.

In fact, these talks are an opportunity to remind businesses and governments on both sides of the border why Canada is a great place to build cars.

Both the union and the company emphasized these negotiations as an opportunity to impart some badly-needed stability to an industry beset by Trump-induced chaos. The union, of course, puts priority on job security for its members at Ford’s operations: the Oakville assembly plant, two major engine factories in Windsor, and three parts distribution centres.

But the company needs stability, too. The Oakville plant is launching a new generation of pickup trucks. This represents a massive investment by Ford, which has pumped $5 billion of capital into Canadian plants despite Trump’s actions.

Any vehicle launch is a complex, sensitive moment for an assembly plant. But the Oakville launch is particularly fine-tuned: the company will produce several specialized variants of large trucks on the same assembly line.

Ford is also launching a new high-feature engine at its Essex plant in Windsor. These two simultaneous product launches underscore the value to Ford of a smooth round of bargaining.

That the two sides have set an internal bargaining deadline two months before the current contract expires (when a strike or lockout would become legal) is a clear indication they aim to reach agreement without a work stoppage, if possible.

The intricate cross-border nature of Ford’s supply chain serves as a parable for the whole industry. Ford’s Canadian-built engines flow to 12 different U.S. and Mexican assembly plants (as well as Oakville). And its Oakville trucks encompass hundreds of different parts made across the U.S. and Mexico. A disruption in any of those cross-border flows (whether from a tariff or anything else) hurts everyone.

That’s why the automakers themselves are dead-set against Trump’s destructive strategy: it’s cost them billions in needless costs, lost efficiency, and supply-chain uncertainty.

Despite recent tribulations, auto is still Canada’s most important manufacturing sector. 120,000 Canadians are directly employed in auto and parts production – and that many again in the upstream supply chain that feeds auto plants with an incredible array of inputs, materials, machinery, and services.

These are high-productivity jobs, supporting good wages and benefits, and anchoring billions of dollars in GDP, downstream consumer spending, and government revenues. Canadian auto plants have higher productivity, better quality, and lower labour costs than in the U.S.

So to answer Greer’s insulting question, we make cars in Canada because we’re better at it than Americans. Not to mention because we spend $100 billion buying 2 million new cars every year, and hence deserve a fair share of the jobs that come with that demand.

A fair and productive round of bargaining, nailing down new investment and securing jobs, would be a powerful and tangible demonstration that this industry is here to stay – long after Trump is gone.