Canada’s auto industry is likely to skirt tariffs on vehicle and parts imports into the United States, with the incoming Trump administration poised to double down on the North American supply base to counter China, according to top leadership at two major Canadian parts makers.
Rob Wildeboer, executive chair of Martinrea International Inc., said Donald Trump’s first presidency was “good for our industry” and that the expected renegotiation of the United States-Mexico-Canada-Agreement in 2026 is more likely to help than hurt Canadian auto interests.
“We believe that tariffs and trade policy will be focused against China,” he told analysts on a conference call Nov. 12, as Martinrea reported its third-quarter earnings.
During the 2024 election campaign, President-Elect Trump threatened a 10-per-cent tariff on global imports into the U.S., but Wildeboer said he expects the free-trade system built into the USMCA to remain intact. The fresh round of trade talks, triggered by the USMCA’s review clause, could even prove beneficial to Canadian suppliers, he added.
“The negotiation process may not be pretty, but the focus will be on higher local content, not lower.”
On July 1, 2026, the U.S., Mexico, and Canada must confirm in writing whether to continue the trade pact.
Linamar Corp. CEO Jim Jarrell told analysts on a separate conference call Nov. 12 that the company does not expect Canada to be the focus of the Trump administration’s trade policy.
“The focus is going to be on Asia, specifically China, in regards to tariffs.”
Trump needs convincing of Canada’s importance
But the onus will still be on industry leaders to illustrate to the White House that the region’s integrated supply chain is an asset, said Linamar Executive Chair Linda Hasenfratz.
“It’s up to all of us to make a case to the new administration that North American cooperation and collaboration to optimize our assets and strengthen all three countries will make us more globally competitive.”
With auto parts crossing the border an average of seven times before landing in a vehicle, any import levy would add up quickly, she added.
“If we’re going to slap tariffs on each border crossing, that’s going to create a lot of cost.”
Hasenfratz said the results of the U.S. election made “clear” that Americans are focused on the economy, inflation and jobs.
“Adding tariffs might help on the jobs front, but it’s going to have a huge negative impact on inflation and Americans can’t afford higher costs than they’re already paying.”
Maintaining the U.S.-Canada compact is not the only component to keeping North America’s auto supply chain intact and tariff-free.
Unlike the United States and Canada, Mexico has not yet implemented a surtax on imports of electric vehicles, aluminum and steel from China.
Ontario calls out Mexico
The issue has rankled policymakers, including Ontario Premier Doug Ford, who said last week that the country has “become a backdoor for Chinese cars, auto parts and other products.”
Federal Finance Minister Chrystia Freeland echoed the concerns a day later, noting Canada is the “only” country to fully align with the United States on China trade policy. There is growing concern from both those close to the incoming Trump administration and outgoing Biden officials that Mexico has not followed suit, she told reporters in Ottawa Nov. 13.
“I think those are legitimate concerns for our American partners and neighbours to have. Those are concerns that I share.”
Wildeboer said Mexico is “sorting through the issues” now, and he sees the country’s newly elected government as “favourably inclined” to follow suit on tariffs. Martinrea is actively engaged on the file, as it operates more than a dozen plants and employs thousands of staff in Mexico.
“There’s going to be rhetoric and so forth, but in my view … it is certainly in the interest of Mexico to align with the United States on this, and I think it is very important for their industry.”
