A Newmarket woman, who has spent over 30 years working for auto parts giant Magna International, is feeling the uncertainty of U.S. President Donald Trump’s tariff threats. Despite no official layoffs yet, she and her coworkers have been informed by the company to prepare for possible job cuts.
“They’re not forcing it, but they’re asking if people want to open employment insurance files,” she explained, hinting that layoffs are likely. “We know something’s coming, but we don’t know how bad it’s going to be. I think we’re going to be laid off for a while.”
Her frustration mirrors the growing anxiety among the 20,000 workers in York Region’s automotive sector, which includes companies like Magna, Martinrea International Inc., and the Woodbridge Group. These companies supply parts, tools, and materials to major car manufacturers, including Stellantis, Honda, and General Motors plants in Brampton, Alliston, and Oshawa.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, cautioned that Trump’s tariffs could lead to widespread layoffs and shutdowns, both in Canada and the U.S. He pointed to the steel industry, where tariffs have already caused layoffs at companies like Algoma. While significant layoffs have yet to occur in the auto sector, Volpe warned that the tariffs’ full impact might soon be felt.
“Auto companies can’t respond by ramping up production because there’s already a labor shortage, and parts are too bulky to stockpile,” Volpe explained. The auto industry is a key barometer of the broader economy, and any disruptions in this sector are likely to reverberate across other industries, including construction, real estate, and finance.
Trump’s tariff strategy, which aims to force American companies to relocate operations back to the U.S., could have far-reaching consequences for both economies. Volpe likened the tariffs to a “wrecking ball” that could destabilize industries in both countries. “Why would you want to destabilize the U.S. economy? I don’t know,” he said, criticizing Trump’s approach to international trade.
The effects of these tariffs could be disastrous, according to Professor Bernard Wolf, a professor emeritus of economics at York University’s Schulich School of Business. Wolf, who specializes in manufacturing changes, pointed out that the North American auto industry has been fully integrated since the Canada-U.S. Auto Pact was signed in 1965, which eliminated tariffs on vehicle parts and created a continent-wide supply chain. This integration was cemented by later agreements like NAFTA and the USMCA.
Dismantling this interconnected system, Wolf argued, would be an economic nightmare. He described Trump’s tariff policy as “bloody stupid” and economically disastrous. The Great Depression’s protectionist trade policies, which sparked retaliatory tariffs and a severe economic downturn, serve as a historical reminder of the dangers of protectionism, he warned.
Wolf added that Trump’s tariffs could trigger a recession, with Canada’s economy likely to suffer more than the U.S. “What Trump doesn’t understand is that international trade is not a zero-sum game,” he said. “It’s not about ‘I win, you lose.’”
If auto companies believe that Trump’s tariffs and threats are short-lived, they might hold off on making any major changes. However, in the long term, these volatile trade policies could cause auto executives to reconsider investing in Canada, fearful that tariffs could return and disrupt their operations again.
As the auto sector watches anxiously, only time will tell how severe the impact of Trump’s tariffs will be on jobs and the broader economy.
