Donald Trump’s return to the White House created substantial uncertainty for Canadian automotive, steel and aluminum producers in November 2024. Industry groups remembered the tariffs imposed during his first term, while also arguing that deeply integrated supply chains and shared concerns about China gave Canada a case for exemptions and partnership.
The experience of the first Trump term
In 2018, the United States imposed tariffs of 25 per cent on Canadian steel and 10 per cent on aluminum. Canada retaliated, and the measures were removed the following year. Producers said the episode raised prices and disrupted companies on both sides of the border.
Jean Simard, president of the Aluminum Association of Canada, feared a second administration could move more quickly with a protectionist agenda. Campaign proposals included a tariff of at least 10 per cent on imports and heavier restrictions on Chinese goods.
Why manufacturing integration mattered
Vehicle parts and components can cross the Canada–U.S. border several times before assembly is complete. A tariff at each stage can raise costs for an American factory as well as a Canadian supplier. That integration gave companies a practical argument that blanket measures would undermine the manufacturing they were intended to protect.
The Canadian Steel Producers Association estimated that the sector supported about 123,000 direct and indirect jobs and that roughly half of domestic production went to the United States. Dependence created vulnerability, while reliable Canadian supply also gave U.S. buyers a reason to oppose disruption.
The scale of the downside
A TD Bank scenario estimated that a blanket 10 per cent U.S. tariff could leave Canada’s real gross domestic product 2.4 percentage points below a baseline over two years. That was a modelled scenario, not a prediction that the loss would certainly occur. The result depended on retaliation, exemptions, exchange rates and how companies changed sourcing.
Tariffs collect revenue at the border but can be paid indirectly by importers, businesses and consumers through higher prices. Their effects are distributed differently across regions and industries, which is why a national total can conceal severe local harm.
A possible opportunity in reduced reliance on China
Canada and the United States had both imposed 100 per cent tariffs on Chinese-made electric vehicles, while Canada added 25 per cent measures on specified Chinese steel and aluminum. Industry representatives argued that this alignment could position Canada as a trusted supplier of metals, minerals and vehicle inputs if Washington sought to reduce Chinese dependence.
Brian Kingston of the Canadian Vehicle Manufacturers Association said faster development of Canadian mining and infrastructure could strengthen that role. Such projects still require environmental assessment, Indigenous consultation, financing and community benefit; speed should not mean abandoning lawful review.
Preparing a Canadian response
Prime Minister Justin Trudeau re-established a cabinet committee on Canada–U.S. relations, chaired by then finance minister Chrystia Freeland. Governments, industry and labour needed a coordinated factual case showing where tariffs would damage American jobs and prices as well as Canadian exports.
Preparation also meant diversifying customers, improving internal Canadian trade and identifying support for workers if negotiations failed. Assuming exemptions would be granted could leave exposed communities without a contingency plan.
The road was uncertain because Canada faced both risk and leverage. Its industries depended heavily on the U.S. market, while American production depended on Canadian energy, materials and components. The appropriate strategy was neither panic nor complacency: document integration, seek predictable rules under the continental trade agreement and prepare proportionate responses if protectionism prevailed.
