Source: PelhamToday
Automotive Parts Manufacturers’ Association president Flavio Volpe has a “positive outlook” on the future as rules-of-origin regulations for automobiles under the Canada-U.S.-Mexico agreement on trade continue to be investigated.
He was a guest speaker Wednesday morning at Niagara Region headquarters, attended by key players in local manufacturing and business.
American content in Canadian vehicles increased from 38 per cent under NAFTA in 2019 to 50 per cent under CUSMA in 2024.
He said the history between nations on this side of the ocean is different as Canada, U.S. and Mexico are in close proximity to one another.
“We’ve built our business in peace across the border,” he said.
The deeply integrated North American automobile market has been upended by Trump’s 25 per cent tariffs on automobiles and separate duties on steel and aluminum.
Automobiles and parts were a critical factor in the negotiations that led to CUSMA replacing the North American Free Trade Agreement. The trilateral trade deal increased the regional value content requirements for allowing vehicles to be traded tariff-free.
CUSMA generally requires that a vehicle have 75 per cent North American content before it can cross the border without tariffs. Forty per cent of a car has to be manufactured in either Canada or the United States for it to obtain tariff-free status; for trucks, that percentage increases to 45 per cent.
The deal also increased North American content requirements for auto parts and raw materials and enhanced the rules on what employees must be paid.
Niagara, a region with four border crossings into the U.S., has a “culture of manufacturing” going back many decades, he said at Niagara Region headquarters Wednesday.
It’s been “a bad 10 years or so,” he admitted, pointing as far back as when John Deere ceased its operations in the Dain City area of Welland in 2009.
But “it’s a new world today” made of new and “more sophisticated” vehicles, fueled by trade and deals between nations.
He believes the ongoing threat of tariffs has to do with the Trump administration “pressurizing the situation,” and that by late this year, exemptions for Canadian manufacturers will be in play.
Currently, CUSMA-compliant auto parts fall under exemptions from U.S. 25-per-cent tariffs, but some parts may still require duties being paid.
“I think that’s the blueprint of what’s going to happen this year,” he said.
He also said there are concerns about a deal struck with China by Prime MInister Mark Carney on electric vehicle manufacturing, but told the crowd on Tuesday he thinks it’s “important to Canada.”
Volpe also said Canadian manufacturers should explore working relationships with countries in Europe.
Flavio was named as a member of the Canada-U.S. Relations Council under former Prime Minister Justin Trudeau.
-with files from Canadian Press