Trump Tariffs Won’t Apply To Canadian Auto Parts, But Will Still Apply To Cars

The Trump administration has opted not to apply new 25-percent tariffs to Canadian-made auto parts that comply with the United States-Mexico-Canada Agreement (USMCA). The tariffs were previously expected to impact the entire North American supply chain, going into effect on May 3^rd. However, U.S. Customs and Border Protection has now issued new guidance confirming that USMCA-compliant parts coming from Canada will be exempt.

According to a report from Automotive News Canada, many Canadian parts suppliers are welcoming the news as relief amid heightened anxiety over the financial impact of the new Trump tariffs.

Canadian Automotive Parts Manufacturers’ Association president Flavio Volpe framed the update as a win, stating that the move effectively avoids a “shut down” of American auto production.

In a statement, major Canadian auto parts supplier Linamar Corp. said that the exemption was essential to maintaining a healthy North American supply chain.

However, Lana Payne, president of Canadian labor union Unifor, stated that while the change protects U.S. factories that rely on Canadian auto parts, the tariffs will still have a major impact on Canadian assembly plants.

“This is both an unjustified and unwarranted attack on the Canadian auto industry, and Canadian autoworkers,” Payne said. “The only fair end to this trade war is zero tariffs on Canadian cars and parts. Period.”

While the updated guidance states that Canadian auto parts are exempt from the new tariffs, vehicles that are assembled in Canada will still be taxed. Additionally, the exemption does not apply to automobile knock-down kits or parts compilations.

GM Canada recently outlined that it would scale back Chevy Silverado production at its Oshawa production facility in Ontario, Canada, cutting one production shift and reducing annual output by roughly 48,000 units. In addition, GM is ramping up truck production at its Fort Wayne facility in Indiana by a roughly equivalent volume.

GM estimates that the new tariffs will cost the company between $4 billion and $5 billion. However, in a recent interview, GM CEO Mary Barra says the automaker will remain competitive in terms of pricing, assuming “a pricing environment that’s similar to what it is today.”