The imposition of tariffs by the Trump administration is significantly affecting the Detroit Three automakers, with industry analysts emphasizing the need for a trade deal featuring low tariff rates to alleviate the financial strain on the North American auto industry. General Motors, Ford, and Stellantis have disclosed substantial tariff-related impacts during recent earnings calls.
Ford revealed a hit of $800 million US (approximately $1.1 billion Cdn) for the second quarter due to tariffs. CEO Jim Farley highlighted ongoing discussions with the White House to reduce tariff costs, particularly on parts tariffs, expressing optimism about potential benefits from negotiations with the administration.
U.S. Treasury Secretary Scott Bessent minimized the tariff consequences, mentioning that discussions with Canada would include tariffs on steel and aluminum, crucial materials in car manufacturing. Both steel and aluminum imports to the U.S. have been subjected to 50% tariffs since June.
Similarly, General Motors reported tariff costs of $1.1 billion US (around $1.52 billion Cdn) for the second quarter, estimating a potential yearly impact of $4 to $5 billion US. The company aims to counterbalance these costs through operational adjustments and cost-saving measures.
Stellantis, on its earnings call, also highlighted significant tariff impacts, projecting potential losses of up to 1.5 billion euros (approximately $2.4 billion Cdn) for the year. The automotive industry is facing challenges due to the 25% tariff on all finished cars entering the U.S. since April, with exceptions under the Canada-United States-Mexico trade agreement.
While consumers have not yet faced increased prices due to tariffs, auto industry workers have felt the repercussions, with production cuts and layoffs observed at various plants in Canada. Unifor’s Lana Payne emphasized the need for a trade deal setting auto tariffs at zero to prevent further job losses and investment declines.
Industry experts stress the importance of securing a trade deal with minimal tariffs to sustain the North American auto industry and prevent production shifts to the U.S. David Adams, CEO of Global Automakers of Canada, underlines the adverse effects of tariffs on automakers and the necessity of strategic negotiations to protect the industry’s interests.
As negotiations continue, stakeholders are cautious about potential impacts on the auto sector and the broader economy. With the evolving landscape of the automotive industry, Canada aims to navigate challenges by fostering international partnerships and adapting to global shifts towards electric vehicles.