The head of Canada’s auto-parts lobby said the Trump administration is prepared to damage its own carmakers to win trade concessions, and warned Ottawa not to buy relief with a weak deal, hours before Canadian retaliatory tariffs take effect on Tuesday.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told The New York Times that when Washington considered collecting tariffs on Canadian parts last year, officials realised US assembly lines would stop within a week; a year on, he said, his members are not intimidated by the prospect of another round.
In an interview with The New York Times ahead of Canada’s retaliatory tariffs taking effect on Tuesday (September 8), Volpe said he hoped the dispute would not spiral further.
However, he acknowledged that Washington may follow through on its threats.
Volpe told the Times that when the Trump administration proposed collecting tariffs on Canadian auto parts last year, officials realized the measure would bring vehicle assembly to a standstill within a week.
By then, parts makers remained unintimidated by the prospect of another round.
A year later, new levies of 15%, 25% and 50% on about C$27.6 billion in American goods are set to begin just after midnight Eastern time on Tuesday, in response to the 50% duties Washington imposed on Canadian exports last month.
Tensions rose as trade talks between Ottawa and Washington collapsed in late August.
Prime Minister Mark Carney pulled Canadian negotiators out of the talks, calling the breakdown an attack and declaring the two countries “at war.”
The Importer Pays
Volpe’s comments to the Times are consistent with a weeks-long public campaign in which the APMA chief has framed the tariff dispute in arithmetic terms, arguing the numbers do not support an escalation.
On social media after President Trump threatened on August 24 to raise auto tariffs to 50% from January 1, 2027, Volpe wrote that the importer of record — not the Canadian supplier — pays the duty when parts cross the border.
“We’ve been over this. The ‘importer of record’ pays the tariffs. A threatened US tariff on Canadian auto parts will be paid by US auto assembly,” the representative stated, adding that “without those specific parts, auto assembly throughout the US would halt.”
He said US assemblers would be pressing the White House for relief the same day.
Auto executives speaking to Reuters on condition of anonymity raised similar skepticism about the threat, noting the president has previously announced large tariffs that never materialized and that a 50% rate would almost certainly provoke massive Canadian retaliation.
The North American auto sector operates on deeply integrated supply chains, where components in a finished vehicle may cross the Canada-US border seven or more times during production.
About 90% to 95% of vehicles assembled in Canada are exported to the United States, according to the Canadian Vehicle Manufacturers’ Association (CVMA) and TD Economics, making any disruption a bilateral problem.
No Rush to Deal
Volpe has been equally blunt about the pace of negotiations.
At a Unifor rally on Parliament Hill on August 28, he described the costs from existing tariffs as “very damaging” — but said a weak agreement would be worse, warning that a bad deal could trigger disinvestment decisions with consequences far outlasting any tariff, according to BNN Bloomberg.
Earlier in August, the APMA chief also told The Globe and Mail that a compromise rate of 10% to 15% on Canadian auto exports would not work for either vehicle assemblers or parts producers.
While he remained optimistic about reaching a deal, he noted a long distance between optimism and agreement.
Under the current tariff schedule, North American manufacturers are absorbing an effective rate of at least 12.5%, Volpe told CTV News Channel then, adding that if a rate of 10% to 15% were locked in permanently, automakers would eventually abandon Canadian production — not immediately, but following the pattern already unfolding at Stellantis’ Brampton assembly plant, which has been idled since late 2023.
Unifor’s National President Lana Payne struck a similar tone, telling BNN Bloomberg that Canada must be prepared to outlast the Trump administration and that concessions would not lead to a good deal.
USMCA Exemption at Risk
The dispute centers on the future of the United States-Mexico-Canada Agreement’s tariff exemptions.
Auto parts that meet the agreement’s rules of origin currently cross the border with a 25% headline tariff but generally incur no duty.
Trump has not yet taken formal steps toward his January 2027 threat, but analysts and Canadian officials have speculated that Washington may strip the USMCA exemption for many goods rather than target new product categories.
During the last round of talks, Washington’s latest offer would have lowered the tariff on Canadian-made vehicles to a headline rate of 15%, down from 25% under Section 232.
Automakers could have reduced the effective duty further by incorporating more US content, bringing the rate as low as 7.5%, CBC reported.
Canadian officials considered even that figure too high.
US Trade Representative Jamieson Greer has demanded a 50% US content requirement for vehicles in broader USMCA renegotiations, a threshold that would reshape how automakers allocate production between the two countries.
$110 Billion
According to CBC, CEO of Global Automakers of Canada Lucas Malinowski estimated that tariffs and trade disruptions had added $110 billion in costs to the North American auto industry over the past year and a half.
Additionally, US auto factories were running at 58% of capacity as of April — their lowest level in more than four years, according to Federal Reserve data.
Canada’s counter-tariffs on American vehicles cut US auto exports to Canada by $5.6 billion, or 22%, between April 2025 and March 2026, according to White House figures.
Carney has signaled he is in no hurry to return to the table, saying Canada’s priority is diversifying trade and expanding domestic capacity rather than waiting for a call from Washington.
Last week, US Treasury Secretary Scott Bessent dismissed the standoff, telling CNBC “I don’t think you can be in a tit-for-tat with someone who’s 13 times larger than you are.”
