US-Canada Tariffs & Auto Industry at Crossroads: Brian Kingston

Brian Kingston, President & CEO at the Canadian Vehicle Manufacturers’ Association, discusses how President Trump's tariffs will affect Canadian manufacturing, whether a leadership change in Canada will help, and how it could all change if the president backs off on 25% tariffs on car parts. The Financial Times is reporting that Trump plans to spare carmakers from some of his most onerous tariffs. He speaks with Bloomberg's Tom Keene and Paul Sweeney.

The Trump administration is considering whether to reduce certain tariffs targeting the auto industry that carmaker executives have warned would deal a severe blow to profits and jobs.

One measure would spare automobiles and parts already subject to tariffs from facing additional duties from levies on steel and aluminum imports, according to people familiar with the matter. That would eliminate so-called “stacking” of levies.

Another option being studied would fully exempt auto parts that comply with the US-Mexico-Canada trade pact, known as the USMCA, some of the people said. Those components don’t currently face tariffs, but the administration had planned to tax the non-US share of those parts from Canada and Mexico. Fully sparing those parts would abandon that approach, which would present a potentially herculean logistical challenge.

The Financial Times earlier reported that the Trump administration is considering reducing tariffs on auto parts — and that they might also exempt auto parts bought from China from a 20% tariff applied to the country over a dispute over fentanyl.

The proposals and options remain under consideration and President Donald Trump has not signed off, cautioned the people who asked not to be identified discussing the matter because it isn’t public. His tariff policies often change quickly, underscoring the fluidity of policy deliberations. But the discussions offer a signal that the administration is considering ways to narrow the scope of levies affecting the auto industry.

If adopted, the changes would be a significant reprieve for automakers who have warned of devastating consequences from the Trump tariffs, including higher vehicle prices, production cuts and potential job losses. The industry relies on deeply integrated supply chains spanning North America for the vehicles they sell in the US.

Trump has separately applied tariffs on goods from Canada and Mexico, though exempted USMCA-compliant goods. The tariffs on autos and auto parts, however, were poised to heavily disrupt the integrated continental supply chain. The US plan, as initially announced, offered something of an olive branch by tariffing only the non-US share of USMCA-traded vehicles, and delaying a potential tariff on parts traded under the pact.

The White House did not respond to a request for comment on Wednesday night.

In the Oval Office on Wednesday, Trump was asked if he was considering changes to auto tariffs and indicated he was not — while also suggesting he might even increase levies on the Canadian auto sector.

“No, we’re not considering it now, but at some point it could go up,” Trump said. “Because, again, we don’t really want Canada to make cars for us. To put it bluntly, we want to make our own cars, and we’re now equipped to do that.”

Detroit’s automakers for weeks have lobbied the administration to exclude certain low-cost car components from planned tariffs. Company representatives have told the administration that broad parts duties would drive up costs and trigger profit warnings and layoffs that would counter Trump’s goal of rebuilding US manufacturing. He plans to travel to Michigan next week.

Carmakers are expected to shoulder much of the tariff burden, at least initially, with margins at many parts manufacturers already running thin.

--------

Watch Bloomberg Radio LIVE on YouTube

Weekdays 7am-6pm ET

Follow us on X

Subscribe to our Podcasts:

Bloomberg Daybreak

Bloomberg Surveillance

Bloomberg Intelligence

Balance of Power

Bloomberg Businessweek

Listen on Apple CarPlay and Android Auto with the Bloomberg Business app:

Apple CarPlay

Android Auto

Visit our YouTube channels:

Bloomberg Podcasts

Bloomberg Television

Bloomberg Originals