Motor Mouth: Dear God, Mark, don't take this advice

Sorry to be writing you yet another missive about this whole auto-industry tariff thing. It is getting tedious, isn’t it? For me, too. And pardon the presumption of addressing this directly to you. It is, of course, the height of hubris for any journalist, let alone one whose column is called Motor Mouth, to think you might read our nonsense.

But at least I’m being honest. While other analysts — all with far more credentials than I — may claim to be penning their latest tariff treatise to their readership, really, they have in mind an audience of one: you. Oh, maybe they’re also trying to reach out to Dominic LeBlanc and Janice Charette, but, since you are, as you reminded everyone recently, “the Prime Minister,” I suspect they’re really trying to speak to you and you alone.

The only reason this screed is in a public forum is that I get paid (a pittance, admittedly) for publishing articles, while a sending an email to the under-under-secretary of the Office of the Prime Minister doesn’t put any food on my table. Besides, the contact form limits expressions of opinion to 2,000 characters, and I used up most of that in the title.

So, to the point. You’re getting all manner of advice from the media these days. Much of it is good, some is bad, and a lot is just ill-informed. Pretty much par for the course, I suspect, for something as technocratic as tariffs.

Some recent missives, however, are just plain dangerous. On one extreme, we have those who recommend abandoning our auto industry. The “Australian model,” if you will. On the other, there have been recent calls — again, from opinion-makers much more credentialed than I — to just blanket the whole automotive world with tariffs. “If the United States can do it, so should we,” seems to be the logic behind this one. Both are, as I said, dangerous. Here’s why.

Australia-fication is not for us

Much has been made in the news of late about how Australia dumped its auto industry and emerged unscathed. Indeed, according to a Globe & Mail piece entitled “If Canada Auto can’t survive, let it fade away,” politicians Down Under figured out that their “market was too small and their wages too high” to allow them to competitively manufacture automobiles. Fair dinkum to the Aussies for coming to this realization, but like most such analogies, especially those from economists who look at aggregate economic factors rather than specific industrial market conditions, it’s not really apropos.

Firstly, Australian-built cars had no obvious auto export market. Japan? Surely, you jest. China? Well, back in the days when Chinese cars were crap, its citizens didn’t have nearly the money to afford a car from a high-cost producer like Australia. Ditto for most of Southeast Asia.

For another, Australia’s own auto market really is pretty small. In a typical year, they move about one million cars — 2025’s 1.2 million sales was a bit of an anomaly — which is just a little more than half of the number sold in Canada. For another, while Aussie-land is a decent-sized market — 15th largest in the world — it is not crucial for any one automaker or model of car. Canada is. Very much so, in fact.

In fact, as Motor Mouth has now detailed many times, we are, by far, the biggest export market for the Detroit Three’s main money-makers, pickup trucks. Give or take a percentage point or two, Canadian sales represent a little less than a sixth of North American full-sized truck production. Ford, for instance, sells well over 130,000 F-Series trucks in Canada every year. If we tariffed F-Series — everything from the F-150 to F-450 — at the going 25% rate, we’d rake in at least $70 million a month. If we went further and matched the 50% bite Trump promises for January 1, 2027 — and, in a move similar to the one Secretary of Commerce Lutnick pulled on us, only allowed remission on Canadian content — that number might hit $150 million per month.

The point I think the Globe & Mail author, Christopher Worswick — a professor in economics at my alma mater, Carleton University, and fellow of the Global Labor Organization — misses in his “fade away” theory is that, contrary to what Mr. Trump says, American automakers need our market as much as we need theirs.

The other irritating aspect of Professor Worswick’s argument is his dismissal of the auto industry’s significance. In fact, he claims its demise would be “manageable.” I guess it depends on which numbers you’re looking at. Auto assembly and auto-parts manufacturing — both are being attacked by Trump — combine to form our country’s largest manufacturing export, totalling $74 billion in 2024, according to a study by the Trillium Network, a non-profit specializing in Ontario’s advanced manufacturing ecosystem. The two also contributed some $19 billion to Canada’s GDP.

Compared with the $12.5 billion (exports) and $5 billion (GDP) that Canadian canola generates — you know, that which we exchanged for China’s access to our auto market — the auto-manufacturing industry certainly seems important to me.

Starting a trade war with everybody isn’t for us, either

Just as counter-productive would be Tom MacDonald’s advice, also published in the Old & MaleGlobe & Mail, called “Canada’s auto sector is marked for death. What now?” Mr. MacDonald — a former director for automotive policy in the Department of Industry and former director general for Canada-U.S. trade relations at Global Affairs Canada — appears to think that the solution to facing down one trade war is to start even more.

Essentially, his remedy for surviving the trials of the 25% tariff the United States wants to levy on automobiles is that “Canada should enact a 25-per-cent global tariff on all vehicle imports.” Yup, like a bad marriage, it appears the solution to one bad relationship is more bad relationships.

On one extreme, we have those who recommend abandoning our auto industry, on the other, recent calls to just blanket the whole automotive world with tariffs—both suggestions are dangerous

As to what these 25% tariffs might accomplish, it’s difficult to see the rosy results Mr. MacDonald envisages. For one thing, it would be a real poke in the eye to all the countries that Canada is trying to sign free-trade deals with. For another, Toyota and Honda, whom Mr. MacDonald lauds for their commitment to Canada, would greatly reduce their footprint.

Toyota annually produces more than 500,000 cars in Canada, and Honda almost spot on 400,000. Using the “tariff relief tied to Canadian production” remission method — I’m presuming he means the one-car-imported-for-every-car-produced-here, as it used to be in the good ol’ days of the Canada-U.S. Auto Pact, which he also lauds — Toyota would only need to manufacture 125,000 to 135,000 cars in Canada to be able to import the rest of its product lineup tariff-free. And Honda would need to build just 65,000 cars locally to fulfill its tariff remissions needs.

Besides the loss of almost 750,000 of the 900,000 cars that they currently produce here in Canada, neither number is actually feasible. For one thing, producing just 65,000 cars in a plant is a non-starter unless they’re all Mercedes-Maybachs. Even 135,000 is barely doable, and then only if they are but a single model, and a highly profitable one at that. Mass production of middle-class cars, like Toyota’s RAV4 or Honda’s CR-V, requires a minimum of 150,000 — preferably 200,000 or even 250,000 — essentially identical vehicles to be stamped out annually. Any violation of that rule — fewer produced, or a greater variability in the final product — makes the venture unlikely to be profitable.

The same, by the way, applies to other automakers such as Hyundai, which Mr. MacDonald suggests might “be more inclined to invest here” if they, too, faced 25% tariffs. Hyundai sells fewer than 150,000 vehicles in our fair country, spread amongst 10 distinct models powered by almost as many drivetrain variations. We’d be looking at a serious reinvention of the wheel if it could pull that off.

Mr. MacDonald also seems to think that the rest of the world would willingly accept these new taxes because, if I’m not mistaking his argument, we’re ‘nice guys.’ Since “Mr. Trump has already bullied our main non-U.S. auto suppliers into accepting tariffs between 15% and 25%,” he says, “surely they should provide a non-bullying ally like Canada a similar level of understanding and forbearance.”

In the face of that argument, I think it’s important to understand what would happen to the any automaker not building cars here in Canada. That 25% tariff would be immediately transferred to consumers who, almost assuredly, would buy fewer new cars. Fewer new cars — as the pandemic taught us — would mean a run on used cars, which would, in turn, result in an attendant rise in the price of pre-owned cars.

Oh, there might be a few exchangeable tariff credits floating around to help blunt the expense of the full 25% tariff, but not nearly as many as you might think, since Toyota and Honda, who would now produce around 750,000 vehicles in excess of what they import into Canada, would have no use for excess production. They couldn’t, of course, ship them to the United States because of existing tariffs, nor could they ship them to the rest of the world if Mr. MacDonald’s tariffs were enacted. That’s perhaps an oversimplification of the disruption this policy might entail, but the real thing would not be a whole lot prettier.

What a real solution looks like

The most obvious way out of the current impasse is something that might allow us a path — however narrow it might be — to continue producing cars here in Canada while giving Donald Trump enough of a win to make him think he could still prevail in the mid-terms. The best suggestion I’ve heard is from Stephen Beatty, the auto industry’s foremost export in tariffs.

In Beatty’s scenario, Canada would agree to Trump’s pre-Lutnick demands, namely that North American Regional Value Content (RVC) would increase to 80%, and some 50% of that (or 40% overall) would specifically be American. As a further concession, 50% of production would be based in the U.S. That gives the Donald a whole bunch of wins.

In return, Canadian automakers would continue to enjoy full CUSMA benefits including duty-free access. On the other hand, cars that weren’t compliant with these new rules would be subject to the 232 tariffs that the American president adores so. Hell, Mark, sign us up for the full 50% and leave it up the automakers to find a way to attain these more stringent CUSMA rules. It’d be a (semi-)fair deal while still offering the Americans a pretense of the dominance they deem so necessary.

Messaged right, it could work. At the very least, it’s a better solution than dumping the entire industry or starting a trade war with the entire world.

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David Booth is Driving’s senior writer as well as the producer of Driving.ca’s Driving into the Future panels and Motor Mouth podcasts. Having written about everything from the exact benefits of Diamond Like Coating (DLC) on motorcycle camshafts to why Range Rovers are the best vehicles for those suffering from opioid-induced constipation, Booth leaves no stone unturned in his quest for automotive veritas. Besides his long tenure with Driving, he was the editor in chief of Autovision magazine for 25 years and his stories have been published in motorcycle magazines around the world including the United States, England, Germany and Australia.

Graduating from Queen Elizabeth High School in 1973, Booth moved from his Northern Quebec hometown of Sept-Iles — also home to Montreal Canadiens great, Guy Carbonneau — to Ottawa to study Mechanical Engineering at Carleton University. There, he wrote a thesis on the then-burgeoning technology of anti-lock brakes for motorcycles and spent time researching the also then-burgeoning use of water tunnels for aerodynamic testing.

After three years writing for Cycle Canada magazine and another three working for the then oldest magazine in Canada, Canadian Automotive Trade, Booth, along with current Driving writer Brian Harper and then Toronto Star contributor Alex Law, created an automotive editorial services group that supplied road tests, news, and service bulletins to what was then called Southam newspapers.

When Southam became Postmedia with its purchase by Conrad Black and the subsequent introduction of the National Post, Booth was asked to start up the then Driver’s Edge section, which became Driving.ca when Postmedia moved into the digital age. In the past 41 years, Booth has tested well over 500 motorcycles, 1,500 passenger cars, and nearly every significant supercar of the last 30 years. His passion — and proudest achievement — is Motor Mouth, his weekly column that, after some 30 years, remains as incisive and opinionated as ever.

Booth remains an avid sports enthusiast — read: fitness freak — whose favorite activities include punching boxing bags until his hands bleed and running ski hills with as little respect for the medial meniscus as 65-year-old knees can bear. His true passion, however, remains motorcycles. If he’s not in his garage tinkering with his prized 1983 CB1100RC — or resurrecting another one — he’s riding Italy’s famed Stelvio Pass with his beloved — and much-modified — Suzuki V-Strom 1000.

Booth has been known to accept the occasional mojito from strangers, and the apples of his eye are a certain fellow Driving contributor and his son, Matthew, who is Global Vice-President of something — though he’s never quite sure what. He welcomes feedback, criticism and suggestions at David@davebooth.ca.