Motor vehicle industry leaders are expected to see discounts for vehicles in line with the current trade deal as Canada and the US continues to discuss the upcoming tariff before the deadline.
On Friday, Canada’s trade talks with the US are a deadline, as President Donald Trump has threatened to put a 35 percent tariff on a wide variety of Canadian goods if both do not reach an agreement before the two countries.
“I think everyone has seen that the Americans, despite the fact that they are fighting with us without any reason, have shown a tendency to show the price for USMCA compliance,” said Flavio Volpee, President of the Automotive Parts Manufacturers Association.
He said that about 50 percent of the parts of vehicles in Canada come from American factories.
“I think here is some hope that we can somehow work a deal that works for both sides, but it includes a USMCA discount on vehicles. If this happens, it will be a sign of relief, but it is also beneficial for Americans,” he said.
The North American automobile industry is deeply integrated and vehicles imported into the United States that comply with the Canada-US-Maxico agreement on trade, are still being hit with 25 percent of their duties on their non-American components.
Given the current trade agreement, which was previously interacted by the Trump administration, the leaders of the auto industry are expecting to look at the carving-out.
David Adams, president and CEO of Canadian Global Automkers, said he did not want to see any tariff on the industry ideally. He said that Canada had previously interacted with the US on a trade agreement, and companies have since made significant investments on the basis of that agreement.
As the industry hopes for carving-out, tariffs are taking their tolls.
General Motors stated last week that its profit declined by 35 percent in its second quarter as it made a hit of US $ 1.1 billion with tariffs. In May, GM reduced its profit expectations for the year, high as US $ 5 billion in 2025 for an estimated tariff effect.
Meanwhile, the company behind brands including Jeep, Chrysler and Fiat said in its latest earnings that Tariff costs the company cost 300 million euros during the first half of the year.
By and large, Volpe said that companies have absorbed the impact of tariffs, resulting in low and high cost of sales.
He said, “You cannot run those losses indefinitely. You are going to take strategic decisions on what additional capacity you are going to turn inside the US, or you are going to accept those sales,” he said.
Adams said that companies are “doing”, but there are long -term concerns.
He said, “The challenge is how you maintain the manufacturing base in Canada, when effectively, the manufacturing base here has become oriented around the duty-free exports of vehicles in the United States for the last 40–50 years,” he said.
TD economist Mark Eucolao said in a note on Tuesday that Canada’s motor vehicle exports have fallen to 20122 after tariff in April.
The report said, “Canadian vehicle manufacturers have since reduced production as they deal with business challenges.”
If both countries are not able to reach a deal, Volpe said that the current tariff would continue to harm the industry.
He said, “This is a slow blood on the amount of vehicles made in Canada, as they are in luck for the most parts, for the US, so we will definitely be in an emergency plan as to how to make that vehicle manufacturing production more gear for Canadian consumers and Canadian consumption,” he said.
However, he said that Canada car companies do not have, and this process would require billions of dollars in restructuring efforts and it would be time -taking.
Despite uncertainty around the deal conversation, Wolpe said he feels that there is a chance to have a business deal this week.
“I know for a fact that the right people are talking on the intensity moved around the clock,” he said.
Unlike the previous trade discussions between Canada and the US, Wolpe said these discussions have been “very quiet”.
He said that sometimes, governments and conversation teams use “strategic leaks” when needed. However, the process is behind the closed doors, which Volpe said that there is a better way to interact with Trump at this time.
On the Canadian side of the talks, Adams said that Prime Minister Mark Carney is trying to meet expectations about the possibilities of a deal, especially without any tariff.
“Perhaps a good strategy because I think anything can be seen as successful, as successful.”
Trump has recently announced several trade structures after Canada-US trade discussions, especially with Japan and the European Union.
Matt Blunt, president of the US Automotive Policy Council, posted on social media last week, “Any deal that charges low tariffs for Japanese imports, which charges a low tariff with almost no American content compared to tariffs on high American-made vehicles, which is a bad deal for US industry and American auto workers.”
Wolpe said he hoped that there is an understanding that “no comparative trading partners” and canady and American regions are deeply integrated.
“American manufacturers of an assembly of vehicles do not rely on the supply of European factories or Japanese parts factories, or raw materials. They do not buy Japanese steel and aluminum or European steel and aluminum,” he said.
“But all this is correct for Canada. Canadian capabilities are a force multiplier for Americans. In addition, our market is the number one export market for American-made vehicles.”
– Ian Bikis in Toronto with files of Associated Press
This report of Canadian Press was first published on 31 July 2025.
Daniel Johnson, Canadian Press
