Canada and U.S. resume auto parts trade talks amid uncertain outlook

The president of the Automotive Parts Manufacturers’ Association, Flavio Volpe, said Ottawa and Washington have recently resumed talks on a possible trade arrangement, though the depth of the negotiations is still uncertain.

"I understand the two sides are talking and the President has shown flexibility for strategic midterm interests, so maybe this is a fertile opening," Volpe said, adding that the group will "wait and see."

The discussions follow a recent exemption by President Donald Trump of several Canadian products from the 50-percent tariffs imposed in August, a move linked to Senator Susan Collins’s re-election campaign. The White House indicated that the exemptions would be offset by levies on other Canadian imports to maintain the overall tariff level.

"I think what the President did with Susan Collins was instructional. It says the White House is willing to be flexible in this last week presumably for a more favourable result in the midterms," Volpe said.

A spokesperson for Trade Minister Dominic LeBlanc’s office said the two countries remain in "constructive dialogue" on a range of priorities and that Canada is prepared to work toward a mutually beneficial agreement that respects Canadian interests.

Volpe cautioned against accepting terms similar to those offered in August, which included a permanent 15-percent tariff on non-U.S. content in automobiles assembled in Canada, while maintaining a 25-percent rate for mid- and heavy-duty trucks. He noted that the profit margin for Canadian auto assembly in 2024 was about 6 percent and that a 15-percent tariff could still be manageable for existing model contracts but might hinder retooling for new models.

"Retooling for new models is a capital-heavy decision and if you are certain you are going to lose the money and you’re not a charity, then the risk is too high," Volpe said.