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RBC Warns Canada’s Auto Sector Could Vanish Without Restored U.S. Free Trade

A July 1 USMCA review will test whether Ottawa can secure tariff-free access that underpins cross‑border production.

FILE PHOTO: New cars are parked in rows after arriving by ship at Annacis Island in Delta, British Columbia, Canada, July 31, 2023. REUTERS/Chris Helgren/File Photo
Image
A general view of the Honda CRV production line is shown during a tour of the Honda plant in Alliston on April 5, 2023.

Overview

  • RBC’s scenario analysis, released Tuesday in Toronto, ties the industry’s fate to the USMCA review due by July 1 and warns all Canadian assembly could close by 2040 without duty-free U.S. access.
  • Canadian automakers’ lobby chief Brian Kingston said the sector cannot survive without open access to the U.S. market and urged removal of the 25% levy on non‑U.S. content in Canadian-built vehicles.
  • The 25% tariff imposed by President Donald Trump more than a year ago helped drive output down to about 1.2 million vehicles in 2025 from 2.3 million in 2016, costing jobs and prompting plant idlings in Ontario.
  • A Canada–China arrangement allows roughly 49,000 vehicles to enter at a 6.1% tariff, stoking concern that lower-priced Chinese EVs will grab share and undercut models built in Ontario.
  • RBC’s best case reaches nearly two million units by 2040 with restored free trade and limits on Chinese EVs, while Magna’s CEO urges a pivot to advanced manufacturing that shifts more work into higher‑skill engineering and software roles.