Last week, President Trump signed a proclamation imposing a 25% tariff on imports of automobiles and automobile parts. The tariff on vehicles begins April 3rd while the start date for the tariff on parts is to be determined. For vehicles imported under the Canada-United-States-Mexico Agreement, the tariff will be based on their non-U.S. content. The goal seems to be to make more vehicles and parts in the U.S.

This is obviously alarming news for Canada’s auto sector and economy in general. To get a better sense of what’s at stake, today’s Twenty-Four provides a basic overview of the Canadian auto sector.

Revenue

As of last year, the motor vehicle and parts manufacturing sector in Canada had sales of just under $95 billion or 11% of total manufacturing revenue. Of this, 88% was based in Ontario and 8% in Quebec. (An estimate for Alberta is not available from Statistics Canada due to confidentiality requirements.)

Complete vehicles (as opposed to parts) accounted for 58% of output last year.

Employment

As of 2023, there were 138,520 direct jobs in the sector. As with sales, the jobs were concentrated in Ontario at 80% of the total, but there were 1,900 positions in Alberta.

Exports

According to Trade Data Online, Canada exported $76 billion worth of vehicles and parts last year or about 10% of total exports. The U.S. is by far our main customer, with 94% of Canada’s vehicle and parts exports going to the U.S.

Once again, Ontario is at the heart of this, accounting for 89% of the auto sector’s exports to the U.S. last year.

These numbers highlight the large size of Canada’s auto sector. In addition, like oil and gas and other keystone industries, the auto sector indirectly supports other economic activity and jobs across the country.

How the tariffs will affect the auto sector will depend on how long they are in place. If they are meant to dismantle the integrated North American auto sector and draw more manufacturing to the U.S., this would be a major blow to the Canadian economy. Even if they are temporary and some sort of arrangement akin to what’s in the Canada-U.S.-Mexico Agreement is reached, the negative impact will be significant.

Answer to the previous trivia question: Voter turnout for the last federal election (September 2021) was 62.6%.

Today’s trivia question: Which company is the world’s largest automaker?