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Trump tariffs threaten Ontario's EV industry

Early this month, Premier Doug Ford projected that about 500,000 jobs could be at risk if American tariffs are applied to Ontario’s export market. Photo by Charlotte Stowe / Unsplash
 

Experts are warning that tariffs planned by U.S. President Donald Trump are threatening Ontario’s EV and green energy sectors — putting jobs, investments and the province’s manufacturing edge on the line.

Ontario’s economy is heavily dependent on trade with the U.S., since 85 per cent of its exports go to the American market. The auto sector is a key contributor, accounting for $36 billion of the $220.5 billion total.

Ontario is home to factories for industry giants like Ford, GM, Stellantis, Toyota, and Honda, which collectively produced 1.54 million cars, pickups and SUVs last year.  The majority were sold to U.S. consumers.

Early this month, Conservative Party Leader Doug Ford projected that about 500,000 jobs could be at risk if American tariffs are applied to Ontario’s export market. He said the province would need to allocate billions of dollars to recover these jobs.

“These tariffs will affect every single person…It’s not going to be good,” Ford said at a press conference launching his re-election bid. “We will use every tool in our tool box to fight back.”

According to a Wells Fargo analyst note, a 25 per cent tariff could increase the cost of Canadian-made components by $830 to $3,400 per vehicle and raise the price of vehicles assembled in Canada by $2,400 to $13,900. 

“The automotive sector supports nearly 100,000 direct jobs in Ontario, and as the industry shifts toward EVs, a substantial share of these positions is being redefined as ‘green jobs,’” said Sheldon Williamson, Canada research chair in electric energy storage systems for transportation electrification. “If tariffs disrupt this sector, a large number of jobs in manufacturing, supply chain management, research and development could be jeopardized.”

Williamson, a professor at Ontario Tech University, warned the tariffs could disrupt Ontario’s rapidly growing EV sector, which has attracted over $45 billion in investment over the past four years in vehicle manufacturing and the EV battery supply chain.

He noted that rising costs and supply chain disruptions might push automakers to reconsider their operations in the province. “This is particularly concerning given Ontario’s growing focus on electrified transportation,” Williamson said.

Ontario is home to factories for industry giants like Ford, GM, Stellantis, Toyota, and Honda, which collectively produced 1.54 million cars, pickups and SUVs last year.  The majority were sold to U.S. consumers. #Trump’s tariffs.

At a press conference on Tuesday announcing new investments in Ontario’s EV auto sector, Linamar CEO Linda Hasenfratz also warned that U.S. tariffs on Canada would bring the automotive industry “to its knees.” She cautioned that such tariffs would make vehicle production unfeasible, as the added costs would be too high for consumers.

Hasenfratz emphasized that automakers would be forced to bear the financial burden — something they could not afford. She added that the U.S. market would also struggle to absorb the increased costs.

Williamson told Canada's National Observer that the uncertainty might even deter foreign investment in Ontario’s emerging EV ecosystem, including battery production and charging infrastructure.

To mitigate the impacts, Williamson suggests that the provincial and federal governments take proactive measures, including subsidies or tax breaks for affected sectors, expanding local EV and battery supply chains, and promoting Ontario’s EV products in Europe and Asia, where demand for clean energy solutions is growing.

But finding alternative export markets for Ontario’s auto sector presents a significant challenge, according to Geoff McCarney, senior director of research at the Smart Prosperity Institute. He noted that the U.S., as a massive market right next door, is difficult to replace in terms of demand.

China, for instance, already dominates low-cost EV production, making it unlikely that Canada could compete in sales of assembled EVs elsewhere, said McCarney in a phone interview with Canada’s National Observer. However, he pointed out that specific components or critical minerals may still find opportunities in international markets.

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