Latest news with #CUSMA
Yahoo
2 hours ago
- Automotive
- Yahoo
Automakers say tariffs are costing them billions and warn of steeper losses ahead
Two automakers with manufacturing operations in Canada, General Motors Co. and Stellantis NV, reported this week that tariffs are taking billions of dollars out of their profits. On Tuesday, GM said tariffs had a net impact of about $1.5 billion on its second-quarter earnings before interest and taxes (EBIT). One day earlier, Stellantis, which produces Fiat and Chrysler vehicles, reported that tariffs exacted a hit of about $477 million through the first half of the year, but warned of steeper losses ahead. Since the tariffs took effect earlier this year, automakers in North America have been warning that tariffs will add costs and make them less competitive at a time when they are navigating a complex transition to electric vehicles. One end result may be less vehicle production in Canada. 'These earnings reports from automakers underline the reasons why we urgently need to get to a deal (with the U.S.) that removes tariffs,' said Brian Kingston, president of the Canadian Vehicle Manufacturers' Association (CVMA), a trade industry lobby group that represents both GM and Stellantis. Beginning in March, when the U.S. briefly imposed blanket 25 per cent tariffs on Canadian goods, and then resuming in April, when the U.S. imposed a 25 per cent tariff specifically on all vehicle imports, auto exports to the U.S. have faced a 25 per cent tariff. The U.S. ultimately adjusted its policy such that vehicles compliant with the Canada-United States-Mexico Agreement (CUSMA) could mitigate the tariff rate based on the percentage of U.S.-built parts contained in a vehicle. At the same time, in April, Canada applied its own 25 per cent counter-tariffs to U.S.-built vehicles. Taken together, the policies are forcing North America's automakers to overhaul their operations so that more vehicles are built in the market where they are sold. That is proving to be an expensive proposition for an industry that spent the past two decades operating under free trade agreements that incentivized global supply chains, under which vehicles cross borders multiple times before being delivered to their end markets. Prime Minister Mark Carney has said he is aiming for a comprehensive trade deal by early August, but also has said there is likely to be some baseline level of tariffs on exports to the U.S. Overall, the uncertainty is already having an impact on Canada's auto sector. GM, for example, has said it plans this fall to cut the third shift at its Oshawa, Ont., plant — expected to cause about 700 layoffs — where it makes light duty and heavy duty Chevy Silverado pickup trucks. At the same time, it has added a shift in Indiana where it also makes the trucks. In addition to the impacts of layoffs on Canadian workers, the move could have another effect: Canada created a 'duty remission' scheme that allowed automakers to import vehicles from the U.S. duty free, based on the number of vehicles produced here. The shift change could reduce GM's production in Canada by one-third. Jennifer Wright, a GM spokesperson, said the federal government is well aware of the impending shift reduction, but could not say how it would affect its duty remission allowance, not least because Carney is hoping to reach a trade agreement before that. The situation shows how automakers are seeking to reconfigure cross-border operations to mitigate their tariff exposure. Wright noted that in 2024, GM sold 294,000 vehicles in Canada, which were produced in South Korea, Mexico, the U.S., and Canada. Now, tariffs create incentives to disentangle global supply chains. 'The auto sector has been designed in the last few years to be a very integrated market,' said Wright. GM said on its earnings call on Thursday that it expects tariffs to take US$4 billion to US$5 billion out of its earnings for 2025. So far, the company has posted strong sales in Canada in 2025, showing an eight per cent year-over-year increase in the second quarter. But Wright also said sales surged before tariffs took effect and she expects to see a softening as the year progresses. Meanwhile, Stellantis earlier this year indefinitely paused a multibillion dollar overhaul of its assembly plant in Brampton, Ont., which was being retooled so it could produce battery-electric, hybrid or internal combustion engine Jeeps, depending on market demand. At its Windsor, Ont., plant, the company continues to produce hybrid and internal combustion engine Chrysler Pacifica minivans, and battery-electric Dodge Chargers, but it has temporarily paused operations twice this year since tariffs were announced. Earlier this year, the company estimated that tariffs could cost it more than $2 billion. But the company is also battling sluggish sales, and shipments within North America fell 25 per cent in the first quarter of the year. GM to cut shifts at Oshawa Assembly Plant in move union calls 'reckless' How Trump's tariffs are already hobbling Canada's auto sector Kingston, of the CVMA, said that overall he expects vehicle sales in all of North America to drop by roughly 10 per cent in 2025. Although Carney has set an Aug. 1 deadline for a trade deal, Kingston called it an 'optimistic scenario.' Nonetheless, he said it is vital to the health of his industry to resolve the trade war quickly. 'The U.S. trade policy is doing significant damage to American automakers,' Kingston said. 'We need a resolution and we need it quickly.' • Email: gfriedman@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Business
- Yahoo
Scott Moe arrives at premiers' summit warning some U.S. tariffs are Canada's 'reality'
Canada's premiers arrived in Ontario cottage country on Monday eager to discuss the country's ongoing trade crisis with the United States and settle into a plan for how they can work together with Indigenous leaders to strengthen the country's economy. On his way into the summit, Saskatchewan Premier Scott Moe said it's becoming obvious Prime Minister Mark Carney's warning that it's unlikely Canada can strike an entirely tariff-free deal with the U.S. is simply "the reality of the situation." "Exceptions, carve outs, exclusions, exemptions — whatever you might call them, that is the reality: that we won't get to zero on each and every topic," he said. "The goal is to get as close to zero, on as many items that we possibly can. I know that's the prime minister's goal as well." Quebec Premier François Legault said that while it may be too early to accept that dour news, any deal needs to provide enough certainty to encourage businesses to invest. "The ideal situation would be no tariffs. But if there are some, we need to have some assurance that we will keep this agreement for three, five years," he said. "We need to have an economy where companies know what's happening in six months, in 12 months from now." Ontario Premier Doug Ford is hosting the 13 premiers in Huntsville, Ont., about 220 kilometres north of Toronto, for a three-day summit focused on the tariffs and trade disruption that have come to define Canada's economic relationship with the U.S. They started the summit on Monday with Indigenous leaders. In the afternoon, they were expected to sign more memorandums of understanding intended to remove barriers to interprovincial trade. N.L. Premier John Hogan's arrival was delayed because of out-of-control wildfires threatening the town of Musgrave Harbour on Newfoundland's northeast coast. On Tuesday, Carney will provide the premiers an update on trade negotiations. The prime minister announced his attendance shortly after U.S. President Donald Trump threatened a 35 per cent tariff on Canadian goods that are not compliant with the existing Canada-U.S.-Mexico Agreement, known as CUSMA. Carney will be in Muskoka Monday evening, when he will join Ford and the other premiers for a dinner at the Ontario premier's cottage. Watch | Ford says Canada working for a fair deal: Ford was unwilling accept that tariffs were an inevitability before the premiers hear from Carney. "What I'm glad [about] is the country is united. We may differ on a few views here and there, but we walk out of here united as a county, as a strong, sovereign country." Ford said if tariffs do remain, Canada needs to start "onshoring everything" by doing things like halting the import of steel for construction and making aluminum cans in Canada instead of exporting raw materials to the U.S. and then importing the finished cans back to Canada. He said the best response is to "start buying Canadian-made everything. That will hurt them more than anything." Moe agreed, saying finding new markets and breaking down provincial trade barriers is a better way to respond than using counter-tariffs, which he said are hurting his province. First Nations and C-5 Canada's premiers will also discuss how to build major projects following the passage of the federal government's Bill C-5, which will allow approvals for projects of national importance to be fast-tracked. Part of that discussion took place Monday when the premiers sat down with Assembly of First Nations National Chief Cindy Woodhouse Nepinak. The law allows cabinet to quickly grant federal approvals for projects such as mines, ports and pipelines by sidestepping existing laws and streamlining the environmental assessment process. Since C-5 became law, some Indigenous groups have expressed concern projects will be pushed through without their consent. "First Nations are united in that we want prosperity, but not at the expense of our rights," Woodhouse Nepinak said Monday after her meeting with the premiers in Muskoka. Ford said there are many First Nations in his province that support major projects and he will work with willing groups to get them built. "As far as I'm concerned nothing moves forward … without the green light from the First Nations communities," he said Monday. Earlier in the day, Alberta Premier Danielle Smith said the historical problem with major projects in Canada is that it can take 10 years or more to get them approved. "I'm supportive of an abridged time frame but I think we have to figure out how that is going to work to make sure that Indigenous communities feel respected," she said. Woodhouse Nepinak said the attitude among Indigenous groups toward C-5 is split. She argues the law was pushed through Parliament without Indigenous consultation. "I think that we're all united against Trump's illegal tariffs. That's one thing that's very clear around that table," she said. "We stand with the premiers of this country in trying to find that path forward, as well as with the federal government," she said. "But they have to make sure that there is space for First Nations people at these tables. We cannot be left as an afterthought anymore." Watch | Premiers meet with Indigenous leaders concerned about Bill C-5: B.C. Premier David Eby said Woodhouse Nepinak asked the premiers in Huntsville to hold a future first ministers' meeting with Canada's Indigenous leadership and the prime minister in attendance. "I'm glad that the premiers agreed," she said after the meeting. "It's time now in 2025 that First Nations are at the table and that we have a bigger seat in this country. And one of those paths of course is through a first ministers' meeting." Ford said Carney will be asked if he is willing to attend. Breaking down barriers Since the trade war with the U.S. began, the provinces have begun signing memorandums signalling their intentions to amend their rules and regulations as part of the largest push in modern history to liberalize interprovincial trade. One study estimates that internal trade hurdles cost the Canadian economy about $200 billion annually, and all provinces have expressed a willingness to work on this issue as a means of countering Trump's tariffs. Moe described those efforts so far as "positive" and that he was hoping to see discussions around moving forward with "a more expansive agreement" on internal trade. The premiers are also expected to discuss Arctic security, wildfires and emergency management, labour mobility, immigration, health and public safety.
CBC
a day ago
- Business
- CBC
Many Canadian exports can avoid Trump tariffs if CUSMA-compliant. Here's what that means
Canadian exporters across a wide range of industries have a way to escape U.S. President Donald Trump's blanket tariffs. That escape hatch is compliance with the Canada-U.S.-Mexico Agreement (CUSMA), the three-way free trade deal signed by Trump back in 2018. U.S. and Canadian officials have said the across-the-board tariffs Trump is threatening to impose on Aug. 1 won't apply to goods that comply with the terms of CUSMA. Trade policy experts say the vast majority of Canadian exports can qualify for this exemption, and that's leading to a stampede of companies rushing to do the paperwork to get their products deemed compliant. Here's what you need to know about CUSMA compliance and how it could protect much of Canada's cross-border trade from Trump's tariffs. What is the CUSMA exemption, and why does it matter? Back in March, Trump imposed 25 per cent tariffs on Canadian exports to the U.S., except energy and potash, which were hit with a 10 per cent tariff. (That's the blanket tariff he's threatening to boost to 35 per cent if there's no deal reached by Aug. 1.) However, Trump quickly amended those tariffs, exempting products that qualify for duty-free status under CUSMA. That exemption — originally characterized as a one-month pause — remains in effect. Around 86 per cent of the value of Canada's exports to the U.S. have the potential to qualify for that exemption and cross the border without tariffs, according to an analysis by RBC Economics. WATCH | Carney downplays chances of zero-tariff deal with Trump: Carney expects tariffs to be part of U.S. trade deal 6 days ago Wolfgang Alschner, the Hyman Soloway Chair in Business and Trade Law at the University of Ottawa, says this gives Canada "a huge comparative advantage" over the rest of the world, which faces broad-based tariffs on nearly all exports to the U.S. "It's a huge deal," said Alschner in an interview. "It's not perfect and it's not good for some [sectors], but overall it's the best deal for any country in the world that currently exists." Which Canadian exports are tariff-exempt through CUSMA? Since the vast majority of products have the potential to qualify for the exemption, it's actually quicker to list the products that don't. Products that contain predominantly non-North American content that are merely shipped on to the U.S. from Canada don't qualify as CUSMA-compliant. The exemption does not apply to products that face Trump's sector-specific tariffs — namely the 50 per cent tariff on steel and aluminum and the 25 per cent tariff on non-U.S. content of automobile imports. But beyond those sectors, anything that is grown in or extracted from Canadian soil, or built with Canadian labour can enter the U.S. market tariff-free under CUSMA. Even U.S. Commerce Secretary Howard Lutnick agrees. On the CBS program Face the Nation, Lutnick dismissed as "silly" the interviewer's suggestion that free trade with Canada is dead, and said 75 per cent of U.S. imports from Canada and Mexico cross the borders tariff-free. What makes an export CUSMA-compliant? In general terms, any product made in Canada has the potential to be considered CUSMA-compliant. However, the exporter has to jump through some hoops and deal with some paperwork to prove enough of the product actually comes from Canada to qualify. This means meeting CUSMA's rules of origin. The rules vary among products, but generally 60 to 75 per cent of a good must come from within North America to be tariff-free. Laura Dawson, executive director of the Future Borders Coalition, an organization that advocates for smoother Canada-U.S. trade and travel, says it can be painstaking and time-consuming to show that a product meets those rules of origin, but it's becoming the "new reality" for Canadian exporters. "It's something businesses are going to have to accept, that if they want to do business with the United States, they're going to have to prove compliance," Dawson said in an interview. How do you prove an export complies with CUSMA? Proving compliance involves obtaining what's called a certificate of origin to smooth the product's tariff-free journey across the border. Steve Bozicevic, chief executive officer of A & A Customs Brokers, says his company's work in providing those certificates has exploded in recent months. "Getting the certification is relatively easy," Bozicevic said in an interview. "Proving it if you get audited, if you are buying things from overseas and processing them, can get a little bit hairier." Official trade statistics show evidence more companies are doing this paperwork: the proportion of Canadian goods entering the U.S. explicitly duty-free neared 90 per cent in March and April, a jump from just below 80 per cent in the first two months of the year. How does the CUSMA exemption play into trade talks? All the indications from the Trump White House suggest that some level of tariffs are inevitable on at least some Canadian exports. That makes maximizing the proportion of Canadian exports that avoid tariffs a key mission for Canada's trade negotiators. The CUSMA exemption provides a path to achieve that, and the three-way trade deal is scheduled for renegotiation in July 2026. But of course, just as easily as he granted the exemption back in March, Trump could pull the plug on it at any time. "If that exemption goes away, we're in an Armageddon scenario," said Bozicevic.
Yahoo
a day ago
- Business
- Yahoo
Carney to brief premiers on U.S. trade discussions as Trump deadline bears down
OTTAWA — Prime Minister Mark Carney will be offering his update on trade talks with the White House when he sits down with the premiers Tuesday, while discussing their concerns as an Aug. 1 deadline for more tariffs rapidly approaches. Carney is joining the provincial and territorial premiers during their summer gathering in Muskoka, Ont. Carney is expected to offer an opening statement, but most of the meeting on Tuesday is set to happen behind closed doors. On Monday, Quebec Premier François Legault said he will tell Carney he wants protection in negotiations for supply management for the dairy, egg and poultry sectors, as well as the exemption for Quebec's cultural industries from free-trade requirements. British Columbia Premier David Eby has said he hoped Carney would kick off trade discussions by trying resolve the softwood lumber issue, which has been a trade irritant between Canada and the U.S. for decades. Carney recently said he thought it unlikely that there wouldn't be at least some tariffs in any deal struck before Aug. 1, though most of Canada's trade with the U.S. is protected by the Canada-U.S.-Mexico Agreement (CUSMA( that exempts most of the goods and services crossing the border. So far, Trump has imposed tariffs of 50 per cent on steel and aluminum; 25 per cent tariffs on goods, automobiles and automobile parts not covered by the CUSMA trade deal; and 10 per cent tariffs on energy. He is now threatening to impose a 35 per cent blanket tariff on Aug. 1 Canada has so far retaliated with counter tariffs on billions of dollars worth of American exports, but Carney is holding off on further measures pending the result of ongoing negotiations by the end of the month. Saskatchewan Premier Scott Moe said he has 'never been a big proponent of increasing countertariffs' and would rather try to find a way to get the White House to renew CUSMA, which is due to begin its mandated review in 2026. Moe also signalled he is prepared to live with some level of tariffs for the time being. 'We won't get to zero on each and every topic. The goal is to get as close as zero on as many items that we possibly can. I know that's the prime minister's goal as well,' he said. Whatever the outcome of the deal is — tariffs or no tariffs — Legault said he will ask Carney to make sure there is a specific time frame to add more certainty for businesses. Speaking in Hamilton, Ont. last week, Carney said his team was 'in the midst of long now and tough negotiations with the United States, and… working for the best deal for Canada.' 'Part of the reason why we don't have a deal is that deal is not yet on the table,' he said. National Post calevesque@ U.S. senators meet with Carney, push to 'reinvigorate' CUSMA ahead of Trump deadline U.S.-Canada trade talks back underway as Trump's wish list, from oil to DEI, keeps growing Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our newsletters here.
Vancouver Sun
a day ago
- Business
- Vancouver Sun
Carney to brief premiers on U.S. trade discussions as Trump deadline bears down
OTTAWA — Prime Minister Mark Carney will be offering his update on trade talks with the White House when he sits down with the premiers Tuesday, while discussing their concerns as an Aug. 1 deadline for more tariffs rapidly approaches. Carney is joining the provincial and territorial premiers during their summer gathering in Muskoka, Ont. Carney is expected to offer an opening statement, but most of the meeting on Tuesday is set to happen behind closed doors. On Monday, Quebec Premier François Legault said he will tell Carney he wants protection in negotiations for supply management for the dairy, egg and poultry sectors, as well as the exemption for Quebec's cultural industries from free-trade requirements. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. British Columbia Premier David Eby has said he hoped Carney would kick off trade discussions by trying resolve the softwood lumber issue , which has been a trade irritant between Canada and the U.S. for decades. Carney recently said he thought it unlikely that there wouldn't be at least some tariffs in any deal struck before Aug. 1, though most of Canada's trade with the U.S. is protected by the Canada-U.S.-Mexico Agreement (CUSMA( that exempts most of the goods and services crossing the border. So far, Trump has imposed tariffs of 50 per cent on steel and aluminum; 25 per cent tariffs on goods, automobiles and automobile parts not covered by the CUSMA trade deal; and 10 per cent tariffs on energy. He is now threatening to impose a 35 per cent blanket tariff on Aug. 1 Canada has so far retaliated with counter tariffs on billions of dollars worth of American exports, but Carney is holding off on further measures pending the result of ongoing negotiations by the end of the month. Saskatchewan Premier Scott Moe said he has 'never been a big proponent of increasing countertariffs' and would rather try to find a way to get the White House to renew CUSMA, which is due to begin its mandated review in 2026. Moe also signalled he is prepared to live with some level of tariffs for the time being. 'We won't get to zero on each and every topic. The goal is to get as close as zero on as many items that we possibly can. I know that's the prime minister's goal as well,' he said. Whatever the outcome of the deal is — tariffs or no tariffs — Legault said he will ask Carney to make sure there is a specific time frame to add more certainty for businesses. Speaking in Hamilton, Ont. last week, Carney said his team was 'in the midst of long now and tough negotiations with the United States, and… working for the best deal for Canada.' 'Part of the reason why we don't have a deal is that deal is not yet on the table,' he said. National Post calevesque@ Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our newsletters here .
