Trump’s threat of tariffs is causing anxiety in Canada’s auto industry heartland


Since 1988, the bulky presses at Lanex Manufacturing on the edge of Windsor, Ontario, have been stamping door locks, folding seat latches, tailpipe hangers, frames and other mundane pieces of metal found in vehicles from Corvettes to Honda minivans.

But these days, worries about the future pervade the plant as President-elect Donald J. Trump prepares to enter the White House. He threatened to impose tariffs of 25 percent on all goods exported from Canada to the United States. In Windsor, it would wreak havoc on his bloodstream: cars and everything that goes with them.

“Everybody’s waiting for the next shoe to drop,” said Bruce Lane, chairman of Lanex, in a meeting room whose walls are made of painted concrete blocks. “If Windsor lost its auto business, Windsor would not survive.”

Few Canadian cities are as keenly aware of the integration of the economies of the two countries as Windsor. The city is just across the Detroit River from Detroit, and the Canadian maple leaf flag is often flown next to the stars and stripes. And no industry has been present across the border for as long as car manufacturing.

“These workers here in Windsor are more exposed to trade with the United States than anyone else,” Prime Minister Justin Trudeau said at the steel mill during a recent visit to the city.

Mr. Trump, he added, “is proposing tariffs that would hurt not only people here in Windsor, but people across the country and even in the United States.”

Windsor shares two major landmarks with Detroit: the $5.7 billion Gordie Howe International Bridge, scheduled to open this year, and the 96-year-old Ambassador Bridge, which carries about $300 million in cross-border trade each day. Of Canada’s $440 billion in annual exports to the United States, only oil and gas account for more than cars, trucks and auto parts.

But given that Canadian officials believe Mr. At Trump’s word that he would fulfill his threat with tariffs, Mr. Lane and others in the auto industry are already preparing for the potential fallout.

George Papp is the CEO of Papp Plastics, whose headquarters are located near the imposing new suspension bridge. He said his US customers, mostly car manufacturers, would simply refer to the terms of the contract he has with them and deduct the customs charges from the amount they paid him.

“Who will take the hit?” Mr. Papp said. “Me and people like me and companies like mine.”

Flavio Volpe, president of the Auto Parts Manufacturers Association, a Canadian trade group, estimated that most of his members have single-digit profit margins and that Mr. Trump’s threatened tariffs would be devastating.

The entanglement of the two countries’ auto industries was cemented in 1965 when Canada and the United States reached an agreement that effectively eliminated the border for the industry. Today, 90 percent of cars and trucks made in Canada are shipped to the United States, primarily by rail.

At Lanex, small metal parts that few drivers will ever see are hammered into shape using a press weighing over 600 tons. Their travels illustrate how intertwined the two countries’ automotive industries have become.

As a small supplier, Mr. Lane does not deal directly with car manufacturers, but sells its goods through major parts manufacturers. The seat locking hooks that Lanex makes for Honda minivans are sent to a plant elsewhere in Ontario, where they are fitted with other parts and then shipped to a production line in Alabama owned by Honda, a Japanese company.

Mr. Lane’s factory sent the parts to Michigan for heat treatment, returned them to Windsor for additional machining and then sold them to an American company.

“Windsor is used to going back and forth across the border,” said Mr. Lane. “It’s like getting out of bed in the morning.”

The turmoil over possible tariffs comes at an already difficult time for the Canadian auto business. Many auto parts makers have yet to see a return to pre-coronavirus levels due to lagging auto sales. In 2020, Lanex had about 60 employees working in two shifts, but now has about twenty employees working in one shift.

The concern is particularly acute in Windsor, which had a city population of approximately 484,000. Aside from the cargo trucks rumbling across the Ambassador Bridge, the city’s most obvious automotive symbol is the massive Stellantis plant that produces Chrysler Pacifica minivans as well as Dodge Charger cars.

A city within a city, the European Stellantis employs 4,500 workers. Backed by billions of dollars in Canadian subsidies, it is building a battery factory in a joint venture with South Korea’s LG in Windsor and recently spent C$1.89 billion (about $1.3 billion) to retool its assembly plant to make gasoline-electric vehicles. – those with drive.

But like many car manufacturers, Stellantis is now in crisis as it struggles with the transition to electric vehicles and competition from China.

James Stewart, president of the local union representing Windsor’s Stellantis workers, said he doesn’t believe the high tariff will necessarily deal a fatal blow to Stellantis’ Windsor operations given how much the company has invested.

But because Windsor’s economic well-being is so tied to trade with the United States, Mr. Stewart said, the tariffs would deal a heavy blow, including business closures, layoffs and production cuts.

“We are a suburb of Detroit; we’ve always felt that way,” he said, adding that Windsor appeared to be “attacked for no reason.”

Mr. Trump initially characterized the tariffs as a way to encourage Canada and Mexico to better secure their borders to reduce the flow of undocumented migrants.

But he also considered making Canada the 51st country, noting that the United States has invested heavily in Canada’s military defense and threatened to use economic force to annex it. He also spoke out about what he describes as the “subsidization” of Canada by the United States, apparently referring to the US trade deficit with Canada, mainly due to oil and gas imports.

The Trudeau government is expected to provide details in order to take revenge against any US tariffs on Monday, the day Mr Trump is due to take office.

But Canada’s relatively small economy makes it difficult for the country to inflict significant economic damage on the United States, although taxes on certain products could hurt individual states. Retaliation would also raise prices in Canada.

Still at the Lanex factory, Mr. Lane said that, by sheer coincidence, the company embarked on a “secret” non-automotive manufacturing project that unexpectedly became a potential tariff shield. He declined to offer any details to avoid tipping off competitors.

Mr. Papp, the owner of a plastics company, said that while he would oppose tariffs that would hurt his business, he was a fan of Mr. Trump and that he understands why the president-elect has argued that the tariffs are necessary to help rebuild industry in the United States.

No matter what happens, Mr. Papp said, Canada and the United States will always remain staunch allies.

“You cannot separate our countries,” he said. “They are joined together.”



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