Canada will not hesitate to retailate against the U.S. should the Trump administration follow through with its threat to impose auto tariffs.
Vice and deputy ministers from Canada, the EU, Mexico, Japan and South Korea will gather in Geneva on Tuesday to discuss an action plan against the possible tariffs, which U.S. President Donald Trump ordered on May 23. Tariffs of up to 25 percent would be applied to U.S. imports of autos and car parts, resulting in a hike in vehicle costs and an overall reduction in auto sales.
His official decision will not be known until the next couple of months, during which a probe will be completed.
“The meeting is meant to bring together major auto producing nations so we can discuss our concerns over the U.S. Department of Commerce’s Section 232 investigation of automobiles and parts,” a Canadian government official told Reuters.
Trump justifies the auto tariffs under Section 232 of the Trade Expansion Act, which allows the president to impose levies upon recommendation by his commerce secretary that goods being imported are a threat to national security. Notable Canadian government officials such as Minister of Foreign Affairs Chrystia Freeland and PM Justin Trudeau himself have been highly critical of the logic that Canada, the United States’ closest ally, would pose a national security threat.
Major automakers including Hyundai, Toyota, BMW, General Motors, Ford and Fiat Chrysler will all be affected by the decision. Many companies have already lowered their end-of-year profit forecasts amid the current trade tensions, causing investors to become skeptical and stocks to fall.
Freeland met with Ministers from Mexico and South Korea in Ottawa last week and had preliminary discussions regarding the auto tariffs. While no detailed steps were outlined, they did discuss the current state of play of the tariff investigation.
“We have checked and listened to each other’s stance. However, as the auto tariff probe is still under way, it’s hard to know how things will turn out at this stage,” a South Korean official (who refrained from giving a name) told Reuters.
The auto tariffs threat is a more serious issue compared to the metals tariffs, considering the size of both industries. In 2016, the U.S. imported $173 billion of cars and $70 billion of auto parts, compared to $21 billion of steel.