The United States President Donald Trump's push for all vehicles built in North America to contain at least 50 percent U.S. content is dividing leaders in Canada's largest automotive manufacturing cluster over whether it represents an opportunity or a threat.
Some in Windsor-Essex, Ontario, a region deeply tied to North America's automotive supply chain, are welcoming the departure from Trump's earlier rhetoric against Canada-made vehicles. Ryan Donally, chief executive of the Windsor Essex Chamber of Commerce, noted that this proposal signals a shift from an 'America only' stance.
'It seems like this is a progression on a stance that was very much America only; American cars, we don't need Canadian cars,' Donally said. 'This isn't them saying we're shutting out all Canadian-made content or we're shutting out all Canadian-made cars. They're obviously setting the stage for what they expect to see in negotiations, but I do think that this is a good starting point. It's at least a movement forward.'
Donally explained that North American-built vehicles already contain close to 50 percent U.S. content and that Windsor-Essex, home to many Tier 2 and Tier 3 lower-level auto suppliers, would not be extremely affected by the proposed requirement. Many of these suppliers sell components to American companies that manufacture auto parts in the U.S.
'If you've got a (Windsor-based) dye maker, a mould maker, they're likely selling that product to the United States,' he said. 'Then that car part itself would be an American car part, but could then be installed in a Canadian vehicle down the road. The full integration is important.'
Ensuring that Tier 2 and Tier 3 suppliers are considered as part of the overall CUSMA negotiation is extremely important, he added.
Throughout his second term, Trump has often declared that the U.S. does not need Canadian-built vehicles, but has also introduced tariffs that have increased pressure on manufacturers to move production south of the border. The latest proposal is the first real indication the Trump administration may not be seeking to completely shut Canada out of the North American supply chain.
Under current CUSMA rules, 75 percent of a vehicle's content must come from North America, though there isn't a U.S. content condition. However, the agreement requires that 40 to 45 percent of a vehicle's auto parts be built in plants where workers earn an average of at least US$16 an hour, giving Canadian and American manufacturers an edge over Mexico.
'We all know that CUSMA is vital to Canada,' said Chris Vander Park, international business manager at Windsor-based Cavalier Tool & Manufacturing Ltd. The automotive sector remains an important part of Cavalier's business, but he said it only represents about 20 percent of exports, so he does not expect a 50 percent U.S. content requirement to affect his company, which provides custom tooling to Tier 1 and Tier 2 suppliers.
