Canada’s Carney Says US Auto Sector Needs USMCA to Compete
Trump’s Tariffs Have Cooled Canada’s Auto Sector, But Also Has Hit U.S.-Based Companies
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Canadian Prime Minister Mark Carney pushed back against President Donald Trump’s protectionism in the auto industry, saying North America’s interwoven supply chain makes U.S. manufacturers more competitive on costs.
Carney, fresh from a trip to meet with Trump in Washington, told a crowd of business executives on Oct. 8 that the United States-Mexico-Canada Agreement strengthens the U.S. industry.
“For America to be fully competitive, to be globally competitive in autos, you need USMCA,” the prime minister said. He added that “not everyone shares that view at this time, and so that’s a real discussion.”
Trump signed the USMCA during his first term after negotiating tougher rules around governing the proportion of North American components that must be included in a vehicle to qualify for tariff-free trade. But in the first months of his new term, he imposed duties on foreign-made vehicles, including those assembled in Canada and Mexico.
“Nostalgia is not a strategy. Our relationship will never again be what it was,” says Prime Minister on the US and Canada.
Carney discussed his meeting with President Trump, coordination for handling global conflicts, and future bilateral deals. — Eurasia Group (@EurasiaGroup)
During Carney’s visit to the White House on Oct. 7, Trump used the industry as an example of “natural conflict” between the two nations, which have had trade agreements that cover automotive manufacturing since the 1960s.
“He wants to make cars, we want to make cars, and we’re in competition,” Trump said in the Oval Office as he sat next to Carney. “And the advantage we have is, we have this massive market.”
Trump’s tariffs have cast a chill over the Canadian automotive sector, but have also affected U.S.-based companies. General Motors Co. has temporarily idled one Canadian plant and threatened to reduce output at another. Stellantis NV, which makes vehicles in Windsor, Ontario — across the border from Detroit — cut shifts at that facility around the time tariffs came into effect.
Commerce Secretary Howard Lutnick, speaking earlier Oct. 8 to the same Toronto business conference, repeated Trump’s position that the U.S. does not want to see cars made in Canada.
But untangling the long-standing and closely intertwined supply chain is immensely challenging.
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Canadian industry officials say vehicles assembled in Canada generally have at least 50% U.S. parts. Last year, the U.S. exported $29.5 billion of auto parts to Canada, while importing $19.5 billion from its neighbor, according to data from the U.S. Department of Commerce.
Canada is also by far the largest foreign buyer of American passenger vehicles and light trucks, with $23.2 billion of purchases last year. The next-largest was Germany at $7.5 billion.
At the event in Toronto, Carney reiterated his view that Trump’s protectionism has permanently altered the ties between the two longtime allies. “Our relationship will never again be what it was.”
