Ford Motor Co.’s CEO says proposed U.S. tariffs on Mexican and Canadian imports of key metals would be devastating for U.S. automakers.Victor Fraile/Reuters
The chief executive officer of Ford Motor Co. F-N warns that U.S. tariffs on Canadian and Mexican imports would devastate the U.S. automaking industry and give a price advantage to overseas rivals.
U.S. President Donald Trump has briefly paused his plan to place 25-per-cent tariffs on all imports from his North American trading partners, but on Monday Mr. Trump said all imported steel and aluminum will be subject to a similar levy as of March 12.
Ford CEO James Farley, speaking at an investors’ conference in New York on Tuesday, said Mr. Trump’s tariffs are creating “cost and chaos” for the Detroit-based automaker, which makes cars around the world and is a major buyer of steel and aluminum, both raw and in finished parts.
“Let’s be real honest, long term, a 25-per-cent tariff across the Mexico and Canadian border would blow a hole in the U.S. industry that we have never seen,” Mr. Farley said.
“And it frankly gives free rein to South Korean and Japanese and European companies that are bringing 1.5 million to two million vehicles into the U.S. that wouldn’t be subject to those Mexican and Canadian tariffs. It would be one of the biggest windfalls for those companies ever.”
Sherry House, Ford’s chief financial officer, said about 90 per cent of the company’s steel and aluminum comes from U.S. sources. However, many of Ford’s parts suppliers use international metals, which would be subject to the tariffs. That would send up costs for Ford.
The Ford executives add their voices to a growing chorus of business leaders in North America who warn the tariffs favoured by Mr. Trump will cause inflation and job losses.
For decades, Canada and the United States have had free trade, adding Mexico to the tariff-free pact in 1994. The agreement, renegotiated in Mr. Trump’s first term in office, has allowed the auto industry to become highly integrated and efficient, with some vehicle parts crossing the border six times before an auto is completed.
“Any import tax that would affect the integrated automobile industry in North America would have a devastating impact on all the car companies because it would dramatically increase their costs,” said Fraser Johnson, a professor at Western University’s Ivey Business School.
Mr. Trump says his protectionist trade policies will bring factory jobs back to the United States and fix trade imbalances, even amid warnings that disentangling North American supply lines will be costly for consumers and businesses.
Mr. Trump’s tariffs on Canada have a darker intent.
He has repeatedly said he wants to annex Canada and would use “economic force” to do so. Canada should become the 51st state if it wants to avoid tariffs, he said.
“Canada’s been very tough to deal with over the years,” Mr. Trump said on Jan. 23, complaining about the U.S. trade deficit with Canada. “We don’t need them to make our cars. And they make a lot of them.”
Canadian plants run by Ford, General Motors Co. GM-N, Stellantis NV STLA-N, Honda Motor Co. Ltd. HMC-N and Toyota Motor Corp. TOYOF made a total of 1.5 million passenger vehicles in 2023, and employed 128,000 people making autos and parts.
Vehicles are Canada’s second-most valuable export, worth $51-billion in 2023. About 93 per cent of this is sent to the U.S., the Canadian Vehicle Manufacturers’ Association says.
Ford employs 1,880 people at two plants in Windsor, Ont., making truck engines. Ford’s Oakville assembly plant closed for retooling in 2024. The automaker said it would spend $1.8-billion to convert the factory to produce electric vehicles and battery packs, but changed that plan last year. Ford is now converting the plant to make Super Duty pickups, which are also made at plants in Kentucky and Ohio.
Joe McCabe, president of AutoForecast Solutions, said possible tariffs on autos and related parts will not immediately jeopardize Canadian auto plants, including Oakville. However, the levies will mean any new investments by carmakers will go to U.S. factories, not those in Canada or Mexico.
Mr. McCabe estimates the Oakville plant will produce about 80,000 Super Duty pickups a year beginning next year, pushing Ford’s overall annual production of the model to about 445,000, a new high. He said there is a 20-per-cent chance Ford will decide this is too many trucks and change its plans again in Oakville. He said if Oakville scales back production to 60,000 trucks a year, it could cause Ford to ask, “Is this plant making any sense?”
Ford spokesman Said Deep declined to comment on the Oakville plant.
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