“I’d be ashamed to drive a Tesla”: Auto expert Flavio Volpe breaks down why tariffs will bring car manufacturing to a screeching halt

Donald Trump’s economy-shattering 25 per cent tariffs on all imports have arrived, kicking off a trade war that threatens just about every Canadian industry—and a fair few American ones too. Chief among them is auto manufacturing, which employs scores of people on both sides of the border. The modern car-making process sees many different factories—each making specific parts, like seats, mirrors or hubcaps—all feed into assembly plants that put the actual cars together. Decades of free trade have allowed the industry to comfortably straddle the border, with Windsor making seats for cars assembled in Michigan and vice versa. Yet Trump’s tariffs have suddenly made working across the border extremely inconvenient. Flavio Volpe, the head of Canada’s Automotive Parts Manufacturing Association, has emerged as a de facto general in the burgeoning trade war. We caught up with him to understand what a divided car market means for Ontario, how to buy Canadian when it comes to cars and what he’d say if he could get Trump in his passenger seat.

How are you sleeping these days? I like to say I’m paid for peace but built for war: I don’t need to sleep much, even though I’d prefer to. But I’m not getting much these days.

A month ago, you preached calm in the face of disaster. Have you remained chill over the past week? I said that because we can’t act until they do. This entire time, we haven’t known exactly what these tariffs would be on and how they would work. As a negotiator, Trump thrives on creating anxiety and extracting concessions. But all of these things have ultimately required a trigger from his end. Now, he’s formally adopted the executive order implementing these tariffs, which was supposed to come into action at the start of February. But the government bodies that would actually institute them aren’t ready, and we still need to see instructions on how the tariffs will be administered. When that happens, it will be my time to react.

Where are you spending your time these days? Rallying the troops here or staring down the Americans in DC? I’m in my office in Toronto, for the most part, though I’ll be back in DC this week. I spend most of my time here in Canada. When I know I’m going to war—trade wars included—I prioritize getting my side ready. When I visit the other side, I do last-minute diplomacy and action. I’m declaring my position, not pleading my case.

You’re a member of Olivia Chow’s newly formed Mayor’s Economic Action Team, which was assembled to tackle the tariff threats and had its first meeting last week. What did you discuss? I sent someone in my place because I was speaking in Montreal at the time. But I’ve spent a good amount of time talking to Mayor Chow about the potential economic fallout of all this. There is a role for mayors to play. They may not have jurisdiction to negotiate trade agreements or the balance sheet to subsidize people’s lost income, but they can still show leadership and take the pulse of the moment, making sure premiers, prime ministers and their fellow mayors on the other side of the border understand the impact of tariffs at the city level. The City of Toronto has a footprint and a municipal budget that gives it extra heft. For example, taking a stand by temporarily restricting new Tesla cars from registering in the city’s Zero Emissions Grant Program was a good moral gavel.

Whom have you been speaking to in Washington? And what have you been hearing? I’ve tried to show congress representatives, senators and key staff members that these threats are seriously perilous. Everybody in DC is on their heels from the chaos Trump has created. These tariffs are low on their list of priorities. Many of them say they agree with the president’s trade posture and dismiss the details by talking about how effective his negotiation tactics are. None of them are friends to Canada.

Instead of trying to find allies, our tactic has been to find leaders with common cause. Take representative Lisa McClain, a Michigan congresswoman who leads the Republican Conference. She has an incredible amount of automotive investment in her district. She’s not going to try to derail the president, but she can be trusted to understand the full impact of having so many of her constituents laid off.

Are you any closer to an audience with the president himself? I’m not seeking one. Industry players, even the ones who cross over into the public sphere like I do, should know the position they play. The prime minister should speak to the president, not me. I have in the past, and I’d go if I were invited, but I’m not expecting an audience. Our challenge is that Justin Trudeau is coming up on his last days in office. We don’t know who the next PM will be, and we don’t know how long they’ll last. Nobody asked me to talk to the president in 2017, when the PM had a healthy mandate. We’re in such a leadership vacuum that people are searching for someone to take on that role. But I wasn’t elected to represent Canadian interests. I represent one sector, and that’s all.

Okay, but say you could get Trump in your passenger seat. How would you change his mind? I don’t know that I would change his mind, but I would say, “Lay off Canada.” We’ve all been polite and professional about this, but people need to speak to him firmly. I understand how silly this sounds, but is anybody saying that to him? I remember when former prime minister Stephen Harper met Vladimir Putin in 2018—he said, “Stay out of Ukraine.” It didn’t work, but at least he didn’t waste the moment. Related: How Trump’s whopping 25 per cent tariffs would hit Canadians’ wallets

You’ve said that the whole North American auto industry will shut down if the tariffs go through. Please explain. Everything that the auto industry does is in single-digit profit margins, whether that’s materials, parts, tools or cars. A tariff is a surtax that has to be collected on the value of something. If I’m selling a part worth $100 from Ontario to Michigan, either my customer or I has to take $25 and give it to the other country’s government. I can’t lower my prices by $25 or I’ll go out of business. And the car company can’t pay $125 and not pass it on to the consumer.

There’s a Jeep factory in Ohio that makes $10 billion worth of cars annually. It buys the seats for those cars from a plant in Windsor. Well, if those seats suddenly cost 25 per cent more, it won’t be able to buy them. Jeep isn’t going to build 5,000 cars that week and put them in a parking lot without seats. They’ll shut down production and switch to making another kind of car instead, which could take anywhere from a year to 18 months. As soon as they stop making Jeeps, they’ll also stop taking deliveries from other factories making parts in North Carolina and other parts of Michigan. Suddenly, the entire industry is in trouble.

We’ve seen this kind of thing happen before. When the Ambassador Bridge was blockaded by protesters opposing pandemic restrictions in February of 2022, the industry shut down for a week—from Ontario to Kentucky. This 25 per cent tariff will do the same thing.

Where will the effects be most felt? Anywhere the US has automotive production, which also happens to be all of the states that delivered Trump the presidency: Tennessee, Alabama, Georgia, Michigan, Ohio, Pennsylvania, Texas and Missouri. None of the auto companies there will be making revenue. It may take a week for the layoffs to come or it may take a month. If they have a collective bargaining agreement, maybe longer. But these companies can’t afford to pay people to stay home. People who believe in the MAGA movement may try to grin and bear it, but they too will have to pay their bills. And it doesn’t have to be every company. There are around one million people employed in the US auto industry. If the companies with particularly tight balance sheets shut down first, about 20 per cent of those jobs disappear. That’s 200,000 people laid off.

Related: How Torontonians feel about the looming US tariff threat

How many jobs will be at risk across Canada? The auto industry employs 144,400 people in Ontario, so if you lost 20 per cent of those, that’s nearly 29,000 jobs gone. But we think the auto industry also creates around 550,000 more jobs indirectly, in things like shipping, customs and professional services for the industry. That’s another 110,000 jobs lost—thousands more people who suddenly can’t pay their mortgages or feed their children.

How would Toronto feel the impact versus cities like Hamilton and Windsor? Toronto will feel it in the financial sector, since banks lend against operating assets. The GTA has over 10,000 people employed in the auto industry. It surrounds Toronto like a dome. Brampton has a Stellantis facility, which is currently paused, waiting to see what will happen. Honda is in Alliston. Oshawa makes General Motors pickup trucks, which will suddenly be $15,000 more expensive for their buyers down in Texas. Every year, Hamilton produces $5 billion worth of steel that goes into cars in the area. Toronto is far from safe from this.

Meanwhile, the automotive sector is to Windsor what water is to fish. It’s hard to imagine the city without the auto business. It’s a world-class industrial cluster, built over 120 years. It would be like what happened to Flint, Michigan, in the ‘90s, when General Motors closed several of its plants there. Thirty thousand people lost their jobs.

A month ago, we headed off tariffs by making the right noises around drugs and border security. Is there any hope for another switch-up? It’s still the same class of tariffs on the same issue: the border. We’ve made some good progress there. On inauguration day, Trump ordered reports from the Department of Commerce to examine trade dynamics between Canada and the US. Those are due on April 1 and 2.

Are we just going to keep doing this, over and over, forever? In Trump’s mind, that would be a good thing. He’s thinking that market uncertainty disproportionally benefits the US. The people around him are aiming for an early review of the United States–Mexico–Canada Agreement, a trade agreement signed in 2020, where they can put all of these issues in a framework that favours the US.

Could Trump’s strategy ever work? Would car manufacturing return in full to the US if tariffs lasted long enough? Say a company tried that. It costs around $500 million to close an auto plant. That means breaking agreements with suppliers, which are “take or pay”: if the plant doesn’t actually buy the parts, they have to pay a penalty. There are also the costs of settling payouts to long-standing employees with seniority. Then, setting up a plant in the US costs another $2 billion. Even if they can start right away—which is unlikely—it would take five to seven years before they’re back up to their previous volumes. All that time, they’re losing revenue, and Chinese manufacturers are eating their lunch. If Trump really tried this, he’d sink one or two of the big American car companies.

What about our own capabilities? Could we retool and make our own damn cars? The last time you spoke to Toronto Life, it was about the Arrow, an all-Canadian EV. Technically, yes. The question is whether we could do it cost-effectively, and that will only be answered if and when we see if anyone would buy it. Would people purchase an Arrow just because it’s Canadian? My bet is no, unless it’s competitive. But someone has to be brave enough to try it, and they should.

Speaking of EVs, Trump seems to have decided he doesn’t like them and is trying to halt the build-out of charging stations. Meanwhile, our government has invested billions into new EV factories. Are those in trouble? We’re past the tipping point on EVs. The president can try to insulate the US, but the rest of the world is transitioning. EVs are a superior technology. The lower maintenance cost, simplicity and power available from a proper battery all make for a richer customer experience. It’s happening whether he likes it or not.

Is there a way to buy Canadian when it comes to cars? Yes. There are a lot of good Hondas—Civics and CRVs get made in Alliston, Ontario. Like luxury SUVs? The Lexus RX and NX are made in Woodstock and Cambridge. We make Toyota RAV4s and Chevy Silverados in Ontario. There are options. The thing is, these same cars are often manufactured in other countries as well. A dealership might have some from here, but they buy their inventory from all over the world. A buyer can use the vehicle identification number (VIN) to check if it’s one of ours. The first digit represents the country of origin, and Canada is 2. The second-best way is to assume that anything made in the US is going to have content made in Canada. Anything made in the Midwest, like the Ford Mustangs made in Dearborn, Michigan, have a lot of Canadian parts. Anything made overseas likely won’t.

What are you driving these days? It had better not be a Tesla. It would never be a Tesla! I would be ashamed. I drive a Jeep Grand Cherokee, made in Jefferson County, Michigan, outside Detroit. It’s 30 per cent Canadian content. Previously, I drove a Lexus RF 350, made in Woodstock Ontario, that was probably 60 or 70 per cent Canadian, but I had to upgrade to give my kids some more back-seat space. But my Sunday car is a Dodge Challenger Demon—made in Brampton.

This interview has been edited for length and clarity.