Tariffs Pave Rocky Road for Canadian Car Industry

Thousands of Canadian autoworkers have been furloughed amid new tariffs in the country.

Now, Canada’s largest private-sector union is warning these temporary layoffs could be the beginning of larger troubles for the sector, Bloomberg reported Wednesday (April 9).

“The industry will not be able to live under these kinds of tariffs,” Unifor President Lana Payne said, per the report. “The longer this goes on, the bigger the fallout we’re going to see. My concern is that we see temporary layoffs turn into much longer layoffs.”

Around 6,000 Unifor members received short-term layoff notices following U.S. President Donald Trump’s April 2 announcement of tariffs on most countries, the report said.

The bulk of those notices went to workers at a Stellantis plant in Windsor, Ontario, which produces Chrysler and Dodge vehicles, and which shut down for two weeks as the carmaker examines the impact of the tariffs, according to the report.

Additional carmakers and car parts businesses have since reduced their staffing levels, including a maker of recreational vehicles that laid off 79 employees last week, the report said.

Canada is countering the U.S. tariffs with 25% levies on imported U.S. vehicles, according to the report. The Canadian government is said to be working on a “remission framework” that could bring relief to automakers from counter-tariffs if they keep production and investment in Canada.

The tariffs — and the idea that they may persist — are a source of concern in the auto industry.

“A 25% [tariff] on automotive imports lasting beyond four to six weeks would likely have a chilling effect on the entire sector as [automakers] need to grapple with significant impact to the bottom line,” said Daniel Roeska, a Bernstein analyst, per a report by CNBC.

The cost of buying a new car could become “prohibitively expensive,” PYMNTS wrote earlier this week. The tariffs that were announced April 2 “may not have an impact, but the overall increase in new car prices through all the tariff actions taken to date will be about 8.4% or $4,000.”

If that happens, there’s a chance that prospective car buyers just won’t buy. Research by PYMNTS Intelligence found that 78% percent of consumers plan to cut back (either by buying less or purchasing cheaper products), due to the expected economic situation.

“Even a decrease of 2% in overall spending across that group would amount to a loss of $92 billion every year to the U.S. economy,” PYMNTS CEO Karen Webster wrote in a column this week. “If prices increase by 10%, the PYMNTS Intelligence study finds that 18% of consumers say they will simply stop buying those items.”