Auto manufacturing industry to ask for 'trade assistance' if tariffs are imposed

"You're probably looking at 30 days."

That's how long it would take before production "grinds to a halt" at automotive assembly plants, parts manufacturers, and other industry businesses on both sides of the border if U.S. President Donald Trump's proposed 25 per cent tariffs on all imported vehicles comes to be.

That timeframe is according toFlavioVolpe,president of Canada's Automotive Parts Manufacturers' Association. Volpe told CBC Radio's Windsor Morning that dealers would feel the squeeze right away, before it trickles down to affect all manufacturing.

"Dealers might make fiveto 10 per cent on a car. If they start underwater, they won't take the inventory," he said."If they don't take the inventory, you will see manufacturing halt on this side of the border."

• Auto industry gathers in Washington to discuss possibility of U.S. tariffs

And Jonathan Azzopardi, chairman of the Canadian Association of Mold Makers, would agree.

"Dealers will stop buying Canadian-made vehicles," he saidand the country will be forced to increase sales to Europe or Asia. But eventually that will "start to dry up" because the factories were put in place to ship south of the border -- not overseas, adds Azzopardi.

It will mean "a slow death" for Canada's auto manufacturing industry, he said.

Most of the parts used to build the Canadian cars are imported into Canada from the U.S., effectively hurting both countries.

There is ideology and populism and then there's sheer madness of sending your country into a recession to prove a point no one understands,- Flavio Volpe, president,Automotive Parts Manufacturers' Association

"Every single auto state in the U.S. would be tripped into recession that's seven or eight major states plus Ontario. For absolutely no reason at all,"said Volpe.

Volpe, like many others, are watching closely as auto industry leaders descend on Washington to urge politicians not to impose the tariffs.

The discussions come after Trump's administration announced they wereconsidering imposing tariffs on all imported vehicles.

On Thursday, the U.S. Commerce Department will hear from experts on both sides of the debate, including representatives from Ontarioand Canadianfederal governments. After the hearing, the department will decide on whether to recommend tariffs to the president.

If the tariffs go through, Azzopardi said the auto manufacturing industry will need to get "trade assistance"from the federal government.

"We are innocent bystanders in this trade agreement, so we're looking for [trade assistance]until things level out," he said. The existing steel and aluminum tariffs are already affecting his industry and without that assistance, he said the the industry slow-down will only happen quicker.

Volpe said even Republican senators, such as Orrin Hatch, have criticized Trump's policy.

"I'd love to hear who is for these tariffs, certainly no one who has any interest in prosperity even on the U.S. side," he said.

That's certainly a part of the Donald Trump playbook which is to go into an issue hard and negotiate,-Sandy Baruah, president/CEO of the Detroit Regional Chamber

"There is ideology and populism and then there's sheer madness of sending your country into a recession to prove a point no one understands," said Volpe.

"We are equally as concerned as our friends and partners in Canada are," saidSandy Baruah, president and CEO of the Detroit Regional Chamber.

"We don't see much of a silver lining in any of this activity."

How much would a car cost?

Like Volpe, Baruahsees the immediate impact a 25 per cent auto tariff would mean on sales.

"Take for example the vehicle with the highest U.S. parts content which happens to be the Toyota Camry of all carsyou'd think the vehicle with the most U.S. content would not be impacted by these tariffs but you would be sorely mistaken," said Baruah.

"Because the parts that go into a Toyota Camry, just like any other U.S.-made vehicle, roughly 25 to 35 per cent of those partscome from other countries."

Baruah said the price of the Camry, for example, would go up about $2,000 - $3,000 overnight.

It's about trade at the heart

Baruahis also concerned about the barrier the tariff would create on one of the busiest trade borders in North America between Detroit and Windsor, Ont.

"If that border is stymied because of tariffs or other kinds of barriers as we saw after 9/11 because we had a physical barrier on the border the economy of both sides are going to suffer greatly," said Baruah.

"And it's going to be the people theworkers that are going to pay the price."

With NAFTA on Trump's chopping block amid an international trade war,some speculate the auto tariffs are a push by the president to reach a better deal.

"That's certainly a part of the Donald Trump playbook which is to go into an issue hard and negotiate," said Baruah.

Mike Jenner is the plant manager at Laval International, a tool and mold company based in Windsor, Ont. Jenner also believes this latest tariff imposition is a strong front from Trump.

"I think that's his last kick at the can before he sits down and negotiates truly," he said. Jenner has worked in the industry for 34 years and these auto tariffs are "uncharted water."

He wants to see the federal government to sit down with Trump to "get a deal done" already.

"Personally I believe this will come to an end, and I hope it's brief."

Baruahurges that imposing tariffs on Canadian vehicles is not the way to stimulate more manufacturing in the U.S.

He said many auto companies will be hesitant to invest in the country if they find themselves in the middle of the mess, and ultimately many products won't come into the market if it's not profitable.