Why US Automakers Make Vehicles in Canada [View all]
President Trump is blowing up the global economy with threats of extortionate tariffs being placed on imports from foreign countries to the US. He sometimes makes the ludicrous claim as in the case of Canada, that it is because Canada “isn’t doing anything” to stop the fentanyl that is allegedly “pouring across the border” into the US with no effort made to stop it. More often, he accuses Canada of unfair trade policies.
He claims for example that Canada is shipping Canadian-made GM and Ford vehicles made in Canada into the US, tariff free and that these should be made in the US by American workers, at the same time that he complains Canada is dumping cheap steel into the US, where much of it is used to make cars! (How vile is that?). In both cases his solution is to slap the Canadian imports with a 25% tariff penalty.
The thing is, there is a reason so many US cars get built in Canada, and probably why so much of the steel used in the US is produced in Canada and sold to US manufacturers. And that reason is not that Canadian workers make less than workers in the US or that Canadian automakers and steel plants are subsidized by Canada. In fact Canadian workers do quite well, because they have much stronger unions than does the US. (In fact the Canadian chapter of the United Auto Workers split off from their American UAW parent in 1985 largely because its leaders and members correctly felt that the US parent union wasn’t militant enough in its bargaining.)
No, the reason a lot of auto and truck manufacturing was shifted away from Michigan and other parts of the US to Canada was because of the enormous cost per vehicle the US car companies were paying for health care coverage for their workers and dependents — which is now adding a production cost of thousands of dollars per vehicle, and that’s not counting the added cost of retiree health care. Canadian companies’ employee health care costs are a pittance compared to at US companies.
https://thiscantbehappening.substack.com/p/why-us-automakers-make-vehicles-and
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