The Current - How much will these tariffs hurt Canada?

Episode Date: August 24, 2026

The 50 per cent U.S. tariffs are going to hit Canada hard. But just how hard? Guest host Susan Ormiston speaks to Flavio Volpe, president of the Automotive Parts Manufacturers'​ Association, and Carlo Dade, the Director of International Policy and the New North America Initiative at the University of Calgary's School of Public Policy, to find out.

Canada's indigenous stories aren't just being told. They're being reclaimed. Explore Canada's indigenous history through telling our twisted histories, the vibrant conversations on unreserved, and the very Inutututuang language archives on Inuit Unikangi. Plus, hear the powerful investigations like Cooper Island and missing and murdered. Listen to the full collection wherever you get your podcast. BBC podcast. I'm Susan Ormiston, and this is the current podcast. With respect to the auto industry, both in terms of the level of the tariffs, the treatment

of Canadian content, so Canadian parts, Canadian steel, Canadian content in vehicles, the scope of the tariffs, Americans wanted to limit it to autos only, effectively moving into a series of terms that would have made the production more uneconomic over time. Mark Carney says there were three central reasons for backing away from a deal with the U.S., and we'll get into the others in a moment. But first, what he did speak about, Canada's auto industry has been in the crosshairs of this trade war from the start. And once again was a big part of what happened over the weekend. Flavia Volpe is the president of the Automotive Parts Manufacturers Association.

He also sits on the federal government's advisory committee on Canada-U.S. Economic Relations. Flavio, good morning. Always a pleasure to talk to you, Susan. You've been busy. My goodness. You were on the program. This program last week, speaking about this deal. Has you understand it? What happened at midnight on Friday?

Well, I think to put it in layperson's terms, we went in, into these negotiations in good faith and made high-level commitments to each other. That away from the table, away from the chief negotiating table, you know, you have dozens of officials that then go and put together the text. So we're working at a quick pace, and I think we knew this over the last four weeks, that a lot of work needed to be done. When Minister LeBlanc says still lots of work to be done, he didn't necessarily mean him with Jameson Greary meant the dozens of officials that had to write up the text. So as the text

started to crystallize, we started to see that the American interpretations of the key principles weren't the same ones that we had and that maybe it wasn't the same principles in spirit as was agreed at the table. And so, you know, you heard the prime minister talk about a series of different things. But he talked about them at a high level, like Canada was not going to give up its ability to have other trade relations with other countries, without consequences from the U.S. You know, we're an independent country. Things like, hey, look, we're going to protect our French identity and culture and our ability

to work that into everything that we do in Canada. Well, those were tied to really specific terms and paper that said, look, in this field, at this time, this is how we want to work. And in automotive, where this started to fall apart was, first of all, the 25% tariff going on a 15, still was two and a half times the profit margin of the companies that make cars in Canada. So you start to work out what the details, what can be excluded?

How do you work down to an actual effective rate that's under that 6%? And I think they discovered in the last couple of days, or maybe in the last day, the Americans did not intend to include medium and heavy-duty trucks. And why is that so important? Yeah, that sounds like we're talking about fire trucks and garbage trucks. What we're talking about is the pickup trucks that are about to be manufactured at massive scale. in Oakville, Ontario and Ford's plant. There'll be 3,000 people making those parts.

It'll be those cars and 9,000 people making the parts. And that's billions of dollars of investment by Ford. And the same thing for the pickup truck plant in Osher for General Motors. There's an engine plant tied to that, that Oshera plant in St. Catharines, and there's an engine plant tied to the Oakville plant in Windsor. And the tariff was going to be so high in those places to not make that product viable. It's probably 20 to 20,000 jobs tied to those two products. So, Flavio, from what you understand, why would the U.S.

try to carve out medium and heavy trucks from any deal that they were proposing to Canada at that stage? Well, I think there's a two-stage answer. One is, for the most part, those are the highest-selling vehicles. in North America, especially in the U.S. Ford F-S. is about 950,000 F-series trucks, the F-150s that we all see, the 250s, 3-50s, heavy duties. They are the lucrative higher profit margin products. They are the flagship products of the North American experience. And Secretary Lutnik had entered the room a couple of days before the deadline.

And remember that he's the one who's been on record, especially hardline with the president's objectives, to get car production out of Canada. And so they knew that one exclusion was going to hit two of our seven auto assembly plants plus the two engine plants that we have. And it's not new what I think was a new discovery as we got towards the final paperwork was that, oh, what we had agreed in good faith, and even that was going to be very, very tough to manage. In the letter of the documents that were coming forward, you know, this is a little

easteric, as we say in the business. So what sense does it leave in the industry about good faith on the U.S. side towards negotiating anything on autos? Well, I think good faith left the room at the beginning of this of this trade fight left last January. You know, we're talking now because this new trade threat put new tariffs on $28 billion of Canadian goods on the 19th of August. Well, automotive in Canada has been looking at tariffs since April of 2025. So I don't think any of us has any illusion about good faith. the president, his commerce secretary,

lots of other people who get the mic in the USA, they want to end car production in Canada. So I think what it tells us overall is, as Team Canada sits down with the U.S., unless we can do it like we did formal, bilateral, trilateral negotiations, chapter and verse on our trade agreement, like we did on the NAFTA renegotiations into the USMCA,

You know, we should think real closely about whether we want to go back into USTR for three weeks on their turf to do it this way. Because, you know, when it comes down to it, they've shown us that we have to read every single piece of punctuation. And we have to think about what they've done with Korea and with Japan and the UK and the EU, which is sign real tough agreements. and then backtrack on their commitments. Flavia, just in the couple of minutes we have left, it leaves a lot of uncertainty for those in the auto industry. There's no deal. There has to be a renegotiation at some point likely.

How worried are you for auto jobs and the well-being of auto workers in the country, given what happened on the weekend? Well, I've been saying for a year and a half that unfortunately for for regular Canadians that drive to work, that are walking into the plant, that they have to go by people like you and I, you know, journalists and advocates, and they go to work and then come home

and just spend time being, you know, regular human beings, they don't have that choice. They've become political. Their jobs have become political, which is nuts. Because everybody's got anxiety. And the anxiety is, look, I've signed up for working in a sector that is the big leagues of manufactured goods. Everybody wants to be in the business.

The Americans are not chasing us because they want to be out of the business. They want to hoard it to themselves. And the Chinese are chasing us because it's the place to be. So you're in the business that's the place to be and you don't know that where you are will be the place in a year or two.

There's a lot of anxiety. And there's a lot of anxiety for the hundreds of Canadian companies that are the unnamed automotive suppliers that are Canadians who are investing, expecting a return on investment, and they want to do it in Canada. We don't know what the future looks like.

We do know what the present looks like. There's a real unity between the labor movement. We work very closely with Uniform, Lana Payne and her team, and all of the Canadian executives and investors and regular hardworking Canadians who are part of the Automotive Parts Manufacturers Association, the Canadian vehicle manufacturers, and we say,

we will fight for these jobs, our past, president, future, until the last whistle. Until the last whistle. Well, hopefully we're not at the last whistle yet. Flavio, thank you very much. Thank you very much. Flavio Volpe is the president of the Automotive Parts Manufacturers Association. He also sits on the Federal Government's Advisory Committee on Canada-U.S.

Economic Relations. Canada will match Washington's new tariffs, dollar for dollar, in order to protect Canadian workers, farmers, families, and businesses. Our response will be concentrated in sectors such as steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics. Prime Minister Mark Carney again, threatening the U.S. with tit-for-tat, tat retaliatory tariffs to come. Carlo Dade is the Director of International Policy and the New North America, initiative at the University of Calgary School of Public Policy.

Carlo, good morning. Good morning. Quite a weekend. Was this the right move for Canada to walk away? I think it was the only move. It's also a precedent set by the other countries, the 21, actually 22 other countries that have gone through this process of negotiating new trade rules with the Trump administration over the past year.

walk away when the deal changes at the last minute, which it has in the majority of those deals, and come back with new offers to work with the Americans. Our situation is a bit different than some of those other countries. We appear to have been closer on tariffs, but further away on other issues, as you just heard from Flavia. Canada's indigenous stories aren't just being told. They're being reclaimed, drawn through the history of our history of words in telling our twisted histories, join the vibrant weekly conversations on Unreserved. Uvallonid, Uqa, Ukua, Urui, and Uriqa, and Uliqa, and Uliqa,

plus experience investigations that refuse to be forgotten, like Cooper Island and missing and murdered. Listen to the full collection now, wherever you get your podcast. So Flavio laid out the concerns about the audio-auto industry, how would you you describe the stakes now? We heard about the uncertainty for Canadian auto going forward. Right. Well, the auto industry is a particular issue. We're closer to the United States, obviously, than is Japan or Korea. They were able to negotiate tariff reductions down from 25%. it doesn't appear that we're going to get a number that will work for the auto industry.

And Flavio particularly mentioned light trucks, which is a particular issue for us vis-to-vis the Americans. But the issues that we have go well beyond just tariff numbers and numbers for trucks. The issue we face is our ability to negotiate other trade agreements with other countries besides the U.S. without the U.S. having a say in what we do. We don't have specific details, but we've seen in some of those other 21 agreements, the Americans have recently signed, restrictions that would be problematic for Canada.

Carlo, one of the things that perhaps was new for many Canadians in the Prime Minister's remarks on Saturday morning was the description of the two other major concerns that ended in his telling his negotiators to come home. and ending the talks. And one was disagreements over French language rules, and the other was our ability to make trade deals with other nations. As you hear the words, how do we make sense of what that was? We don't know exactly what he's talking about. What do you know? Pretty much what everyone else knows. We're still waiting to get a specific text. But again,

we do have text from the 21 other agreements and the negotiating process there. And that doesn't tell us what happened here, but it sets the parameters. We can kind of guess within established facts and evidence from what happened before. On the negotiations with other countries, two points. Those have ranged from, I think the most stringent was the deal of the American signed or twisted Malaysia's arm into signing. which essentially is similar to what we had in Kuzma, but expanded beyond countries that the U.S. considers to be non-market countries, i.e. China. In the Malaysian agreement, the Americans basically said that Malaysia had to align with U.S. economic security policy,

in any other agreement it signed, and if it didn't, the U.S. could end the agreement. effectively giving the Americans a political, if not a psychological, veto over Malaysian trade policy, or at least undue influence over Malaysia's ability to negotiate other agreements. If that's what the Americans had on the table, then obviously that's going to be hugely problematic for us. Obviously. And why do you think the Americans would think that Canada would go with that? given the last year of Mark Carney's traveling around the world trying to get new trade agreements on Canada's terms? Well, maybe it's because Mark Carney was traveling around in the Americans feel that have less negotiating power. Look, 21 other countries have taken some form of that. These include the EU, UK, Japan, Korea.

So the Americans have a track record that would inspire confidence. Also, if you look at the Kuzma agreement, we essentially accepted something similar. Again, we don't have the text of exactly what they asked this time, but we accepted something similar in Kuzma, agreeing that we would include the Americans in our trade negotiation process with a non-market country, a country the U.S. defines as non-market country. Non-market countries, a term only used by the Americans. Everyone else uses non-market economy. So that language was telling. But we told the Americans we would give them advance notice. We would share negotiating text with them.

And the Americans said that they could leave Kuzma if we signed an agreement with the non-market country. That's something the Americans could have done anyway. There's always the ability to say, I'm leaving your six months notice and give whatever reason you want. But we kind of established a principle for this earlier on in Kuzma. And one last quick point. The problem with that was we agreed, and then five minutes after we signed Kuzma, the Americans turned around and signed their own agreement with China that gave American agricultural producers distinct advantage over Canadian exporters. So this is a precedent we may have established with Kuzma, but it's one that's subtle in its ability.

to really harm us. Carlo, we talked about Otto. What impact does these talks falling apart have on the dairy and lumber sector at this moment? Well, it puts an uncertainty, obviously, for Stahl's investment and the usual things you'll hear, folks like myself or economists say. But remember, if we look again at the history of the 21 previous agreements, we've seen breakdowns and eventual resumptions. The time period ranges from a few weeks to a few months to Vietnam, which is still talks have broken down and haven't resumed. So I think that sets a parameter if the other

agreements hold that we're probably looking at a break of again a few weeks to a few months. That's interesting. When Carney says he'll be instituting dollar-for-dollar retaliatory tariffs, it seems like that would make negotiating even more difficult, maybe stretching that pause that you suggest. What do you think? Absolutely. And this is where Canada breaks from the history of the 21, other 22, if you count Vietnam, other negotiations. No one else offered retaliation the way we have. So this is a new twist. It may be testing the limits of American ability to use terrorist pressure countries. Japan and others faced higher tariffs than we did.

Oh, no, sorry, we have the highest tariffs, 50% are higher than I think anyone else faced. So this may be looking at the limits of America's tariff authority as they prepare to go after Mexico and go after the next 21, 22 countries, their list for bilateral negotiations. We also, it also will be testing, of course, Canadians' willingness to withstand higher tariffs. I mean, we're talking about $28 billion worth of Canadian exports, now 50% tariffed. What can Canadians expect on their bottom line as we start to feel this in the short term? You know, that's a good question. I haven't run the numbers for the Canadian.

impact, but I did run the numbers for the American impact. And right now, and again, remember that about 37%, I guess now it's going to be closer to over 40% of everything Canada sends to the U.S. by value faces a tariff, the Section 232 tariffs in particular. The impact of those tariffs charges on goods entering the U.S. from Canada impacts the average U.S. household to the tune of about seven to 25 cents a day, $25 to $90 a year for the average American household. So in work we've done in the States, we were just down in Colorado doing extensive surveying and interviewing. The tariff impact from Canada just isn't showing up.

It's a tariff impact from China that Americans see. So despite the politicians in the U.S. saying that they're in the business community saying this impacts Americans, talking to Americans, asking them about their household incomes and what they see every day, terrorists on Canada aren't registering. That's interesting. How much tariffing do you think both countries can endure? I mean, you've described it now as not being hugely impactful for Americans at the moment. But at what point does escalation reach a stalemite? When is it too much? I don't know, but our interviewing, surveying, and polling pointed out that 87%, this is in Colorado,

87% of the folks are most concerned about affordability. If you think about that, 87%, even those who may be better off are still worried about the issue. So there's potential for this to come out politically, or if it does start to have a noticeable impact to really move the politics in the U.S. at the grassroots level. Carlo, I'm sure you've been watching the reaction in the United States over the weekend. Does it appear that Americans are buying the White House administration's understanding of what happened or their cell of what happened to bring the talks to an end? Oh, I don't know.

From the work that we've been doing at the grassroots at the state level, that would require, I think, a real intensive effort to get an answer to that question. You just can't survey. You've got to do a full process of going in, focus groups, talking to people to really understand. Based on the work that we've done in Colorado, I don't know. Folks are just so overwhelmed with affordability, environmental issues, forest fires, aridification. There are a whole host of issues that rank far above trade. It's a concern to us because we're in Canada, but when you cross the border and get down to the grassroots level,

what we're finding is, as you would expect, it's just not registering. Carla, we just have a minute left, but could you help us with a pathway forward? What are you watching for that could indicate that the path towards a deal could be back on? Well, a couple things. One is Mexico. Should the Americans turn to Mexico and be able to get concessions out of us so they can't get from Mexico, that, of course, flips the script. We now have pressure from that side.

The deal has been struck for North American, the organization of trade within North America, and we may have to shift our position. If we can get back to the table with the Americans, so as the Japanese, Swiss, or Koreans, etc., etc., did, and rework the terms, get the Americans to define the alignment on economic security, meaning ability to sign other agreements in the way that we can live with, the way the 21 other countries have been able to assign deals that they can live with, there's progress. So we want to see resumption of talks,

and we want to see them proceed the way that other countries have managed to get back to the table with the Americans and not wind up where Vietnam wound up with no agreement. But this retaliation is going to be interesting because we don't have a precedent for that. Exactly. Well, we'll have to leave it at that. I'm sure we'll be speaking to you again. Thank you very much for your time this morning. My pleasure.

Carlo Dade is the Director of International Policy in the New North America Initiative at the University of Calgary School of Public Policy. You've been listening to the current podcast. I'm Susan Ormiston. For more CBC podcasts, go to cBC.ca.ca slash podcasts.