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United States President Donald Trump may have said he would apply 25 per cent tariffs on Canadian goods on Tuesday, but auto executives on Monday were still scrambling to figure out if he meant it.

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Phone lines lit up, chat channels buzzed, in-person meetings were convened and emails were sent as auto executives and lobbyists spent hours reading the tea leaves to figure out whether and when U.S. tariffs will arrive, how they will be applied, how long they could last and other details.

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Canada’s auto sector sends 90 per cent of its exports to the U.S., making it particularly vulnerable to a 25 per cent tariff. Auto industry insiders said it would have a dramatic impact on sales, forcing a halt to auto production within weeks, not months.

Around mid-morning on Monday, Trump decided to delay tariffs in Mexico by one month. But Canada had not received a similar reprieve by mid-afternoon. Meanwhile, Trump posted messages on his own social media platform that raised new complaints about U.S. banks’ access to Canadian markets, which is being seen as a curveball by some who noted he had previously said the tariffs related to the flow of fentanyl and illegal border crossing to the U.S.

“We need to start time-stamping our conversations,” Tim Reuss, president of the Canadian Automobile Dealers Association, a lobbying group, said. “Let’s say it’s turbulent times. There seems to be a moving target here and we’re just trying to keep our members as best informed as we can.”

One key question being discussed within the auto sector is why Trump wants to apply tariffs to Canada at all, given it is a close ally and one of its largest trading partners. One school of thought holds that Trump is hoping to raise money through tariffs to help pay for promised tax cuts, and that they would be short-lived and cancelled before they enacted too much damage on the North American economy.

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But a second school of thought holds that Trump wants to pressure companies to move their manufacturing to the U.S., which may mean the tariffs would have to be in effect for years due to the level of investment needed for complex manufacturing.

Either way, no one in the auto sector thinks production could continue profitably with a 25 per cent tariff. The immediate impact would be an increase in the price of a vehicle in the U.S., which, in turn, would affect overall sales, and then ricochet back to slow production in Canada until it eventually stopped.

“Whether that takes a week or two weeks or whatever, it’s not a long time,” said David Adams, president of the Global Automakers of Canada, a lobbying group for non-North American automakers such as Volkswagen AG.

The exact impact on the price of a new vehicle depends on whether the tariff is applied every time an auto part crosses the U.S.-Canada border or if it is only applied once to the finished product — a vehicle that appears on a dealer’s lot.

Reuss said the tariffs would also affect Canadian vehicle sales. To the extent that many economists believe tariffs would usher in a recession, that is likely to drag on domestic vehicle sales.

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Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, pointed to the Freedom Convoy’s protests in 2022 that halted traffic on the Ambassador Bridge, which connects Windsor, Ont., to Detroit — the respective, unofficial capitals of each country’s auto manufacturing sector.

Within days, auto plants on both sides of the border faced challenges that stunted production, he said.

“We would be looking at production stoppages across North America, job losses and prices increasing,” he said, “and this could not come at a worse time because the sector is transforming” during the energy transition.

Kingston said no one knows the exact economic impact of the tariffs because the details are vague and being gleaned by reading social media posts, which are not always reliable. But initial ballpark estimates suggest the tariffs would add at least $3,000 to $6,000 per vehicle to a manufacturer’s cost and potentially much more.

He said that creating new production costs in the North American auto sector — through tariffs — is likely to benefit China as it increases its share of the growing electric vehicle market.

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Meanwhile, tariffs will stunt the entire North American vehicle supply chain, even upstream miners that have been relying on automakers to help fund their projects.

Greg Da Re, vice-president of corporate development at Frontier Lithium Inc., which is developing a hard rock mine in Ontario, said the tariffs will affect his company as it raises money to begin mining lithium, which can be used in batteries for EVs.

“We don’t want to see the tariffs because they put the auto companies at risk, and that’s our downstream customer,” he said. “The last thing we need is uncertainty: Right now, all eyes are on Canada as a stable place to invest for this energy transition. This type of stuff kind of throws a wrench in the works.”

For now, automakers are hoping Trump backs down and never implements the tariffs or softens his stance in some unexpected way. Of course, no one knows anything.

“That’s the modus operandi of the president,” Adams said. “To keep everyone uncertain.”

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