Aftermarket keenly focused on tariff threat

by | Aug 31, 2018 | 0 comments

Automotive Industries Association of Canada president JF Champagne says that, while NAFTA is in the headlines, it’s the threat of tariffs that concerns the aftermarket most.

“From an aftermarket perspective, we do support a strong auto parts manufacturing sector. It’s good for the economy and that’s good for everyone.

Specific to NAFTA, we don’t have the same level of concern as the OEM and their Tier 1 manufacturers. The stakes are not the same.”

JF Champagne

JF Champagne, President, Automotive Industries Association of Canada

It is the threat of tariffs that Champagne says is the greatest concern for the aftermarket. In addition to Canadian manufacturers that export to the U.S., there is the prospect of retaliatory tariffs on products coming to Canada. And there is also the possibility of moves designed to prevent the “surge” of products that could be diverted to Canada as the U.S. ramps up tariffs on China and other countries, particularly steel and aluminum.

U.S. president Donald Trump has threatened 25% tariffs on the automotive industry if Canada does not come to an agreement on NAFTA. He also set a deadline of August 31 for an agreement.

The aftermarket supply web is arguably more complex than the OEM sector, with products being sourced globally and arriving in Canada directly or through the U.S. and Mexico, as well as those coming directly to Canada from the U.S. to thousands of businesses that make up Canada’s $21 billion automotive aftermarket.

The AIA has been monitoring NAFTA developments closely and speaking to stakeholders to ensure their concerns are part of the conversation, says Champagne. The AIA has a seat at the table for a host of organizations that have worked to express their concerns over recent trade uncertainty.

“We are part the Canadian Manufacturers Coalition, spearheaded by the Canadian Manufacturers and Exporters Association. We also work with the group of associations through the Canadian chamber of commerce. And we are also a member of the Canadian Automotive Partnership Council.”

That council recently came out with a strong position on the prospect of tariffs, stating that they “would severely harm the industry’s ability to compete on the global stage.”

“The situation is fluid, but we already understood that the U.S was going to engage with Mexico. We were not surprised by the bilateral conversation. It’s still part of the trilateral conversation. There was a misconception that the bilateral conversation with Mexico was separate, but all these negotiations are framed within a trilateral NAFTA negotiation. There is the perspective that Canada would be left our and this is not the case.

“It’s a good day to be optimistic.

“Our U.S. partners have vey much echoed our position that we operate in a highly integrated economy and it is good for Canada and the U.S too.

“I am personally very confident that we will come to an agreement that will us to each grow our respective economies.

“I sense based o what we’re hearing that they will get it done. I think it’s positive.”

But it has been a rocky ride to this point, and that has kept business concerned.

“What we have heard from our consultations is that uncertainty is not good for business. We want to make sure that we provide the right framework for industry to feel confident. The sooner we can turn the page and have less uncertainly ahead is what we all aim for.”


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