In his latest tariff flip-flop, Donald Trump is now saying that the 25% tariff that is to apply to auto vehicles and parts imported from Canada into the USA will not actually apply to CUSMA-compliant auto parts.
This is seen - on this side of the border at least - as a major carveout and climb-down. But it raises the question: which auto parts are, and are not, covered by the Canada United States Mexico Agreement of 2018? Is it not ALL auto parts? (If not, why not?) I have not seen a simple guide to what this exemption actually means in concrete terms for the Trump tariffs.
Given that auto parts can cross the Canadian and US border several times during production, as we know, it would be a logistical nightmare to identify non-American components of cars and their various parts. If there is a further distinction between CUSMA-compliant and non-CUSMA-compliant parts, the task becomes even more onerous. Is anyone keeping track of the time, effort and cost of the extra admin involved?
The big auto companies are already responding to the imposition of the tariffs, even before they take effect. For example, GM is eliminating one shift at its Oshawa assembly plant, driven, it says, by soft demand and trade uncertainty, involving cuts of over 700 jobs. Does this take into account the latest tariff carveout? Who knows?
Talk about chaos and uncertainty! The announcements are coming so thick and fast that even the people most affected can't keep track if it all. What a mess!
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