TORONTO -- Donald Trump's heightened attacks on Canadian Prime Minister Justin Trudeau are raising concerns that he might follow through on threats to impose auto tariffs, a move that could devastate the car industry in Canada and lead to higher U.S. prices.
The Trump administration's pledge to consider tariffs on all imported vehicles took on more urgency last weekend after Trump and his advisers accused Trudeau of "bad faith diplomacy" for his trade comments following a meeting of Group of Seven leaders in Quebec.
"I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!" Trump tweeted Saturday evening while en route to Singapore aboard Air Force One. "Very dishonest & weak," he said of Trudeau.
Trump has asked the Commerce Department to review whether vehicle imports threaten national security, which would add to levies already imposed on steel and aluminum. The car tariffs could apply to all countries, including Nafta partners Mexico and Canada, the two biggest exporters of autos to the U.S.
"I think we are all sitting with bated breath hoping that cooler heads prevail, but most of us believe there's an equal chance that they won't," said Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ontario.
The tariffs would have to clear several hurdles before being implemented, including fierce opposition from the industry and Republican lawmakers who tend to favor fewer and lower taxes.
Yet after White House trade adviser Peter Navarro said there's a "special place in hell" for foreign leaders like Trudeau who engage in bad faith with Trump, Canada's auto sector may be more at risk.
Motor vehicles and parts were Canada's biggest export after energy products, representing about 16 per cent of the C$7.4 billion ($5.7 billion) in shipments over the first four months of this year. The Canadian auto industry directly employs about 130,000 people and contributes more than C$20 billion annually to gross domestic product, according to the Canadian Vehicles Manufacturers' Association, which represents the Canadian arms of General Motors, Ford Motor Co. and Fiat Chrysler Automobiles.
If the tariffs are implemented, they would shave about 0.6 per cent off Canadian economic growth, estimated Brett House, deputy chief economist at Bank of Nova Scotia.
With the economy growing at about 2.2 per cent, that's lopping off more than a quarter of growth, he said. "There's no question it would be felt."