The mayor of the border city of Windsor, Ont., says the potential for steep U.S. tariffs on Canadian goods could have a near “catastrophic” impact on the economy and jobs.
Mayor Drew Dilkens told The West Block’s Mercedes Stephenson that such tariffs, which U.S. President Donald Trump has delayed until March, would impact many sectors important to his city, including automotive.
“We’re on the precipice of being catastrophic,” he said.
“Twenty-five per cent for us would certainly mean that the price of vehicles would go up. People would simply defer spending 25 per cent more for the price of a vehicle waiting for some more certainty. It may make imports more attractive, quite frankly.”
He went on to explain that shift away from Canadian products, and people waiting for more certainty, would then cascade through the supply chain starting with auto manufacturers who would adjust their inventory due to reduced sales, and result in layoffs in automotive factors.
Then, the auto parts sector would need fewer people to make less parts for fewer cars, leading to more job cuts.
It would even trickle down, Dilkens said, to a worker at Tim Hortons being laid off as people put away money for “weathering the storm,” and cut down on spending.
Dilkens said the changes to the supply chain would happen quickly, suggesting Canadians would see impacts in the span of weeks rather than months.
Trump has threatened across-the-board tariffs of 25 per cent on Canadian goods and 10 per cent on energy exports to the U.S., set to start early next month.
Canada is also facing 25 per cent tariffs on steel and aluminum imports set to come into place on March 12, which would impact cities like Windsor and other cities whose central industry is in steel or aluminum, such as Hamilton, Ont. or Sept-Iles, Que.
But Trump has also threatened a tariff of up to 100 per cent on Canadian cars, and industry voices in Canada warned that such a tax could lead to a shutdown of the entire North American auto industry.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told Global News earlier this week that “hundreds of suppliers and dozens of automakers” said in meetings they would refuse to pay Trump’s surtax, which would bring the industry to a grinding halt.
With the supply chain so integrated, Volpe added just one supplier backing out would have immediate impacts.
It’s that integration that Dilkens notes would cause such an impact. Parts that go into a vehicle cross the border an average of six or seven times before the car or truck rolls off the line.
“We have this tightly-integrated economy that any threat that disrupts it with the effect of tariffs will have a negative impact on my city and our country for sure, but will have an equally impactful result to workers and residents across the other side of the border too,” Dilkens said.
The automotive industry, however, isn’t the only one that will see an impact, with Dilkens noting 85 per cent of the produce from agriculture facilities in Windsor-Essex are exported to the U.S.
He said stores like Kroger or Costco sell produce such as cucumbers and tomatoes produced in Essex County, where Windsor is located.
“I guess the question is, will American consumers, would they be willing to pay 25 per cent more for the product that they buy?” he questioned. “We all have to eat, we don’t all have to buy a car.”
Dilkens said in discussions with border city mayors in the U.S., they’ve shown understanding of the impacts tariffs would have on their communities but have added Trump’s rhetoric is a negotiating tactic.
What Dilkens says he wants to know is what Trump want to accomplish.
“I think the pathway exists, if we only knew what the goalposts were,” Dilkens said.
Whether it’s an early renegotiation of the U.S.-Mexico-Canada free trade agreement or more work on border security, knowing what the “goalposts” are could allow both countries to find a resolution.
“Until we know what that end goal is, it’s very difficult for us to continue to throw darts at the dartboard, hoping that we pop the right balloon,” Dilkens said.
—with files from Global News Mercedes Stephenson