A 30-day pause on the imposition of tariffs and an ensuing trade war is a reprieve welcomed by all business quarters in Canada, the U.S. and Mexico. But the threat of broad tariffs continues to hang over the heads of every business and individual in each of these three countries.

Though the aftermarket industry was not specifically called out in most of the tariff lists, U.S. President Donald Trump called for a sweeping all-in tariff on all goods from Canada (10% on energy, 25% on everything else). In retaliation, a targeted list of countervailing tariffs from Canada on U.S. goods did include tires, tools and possibly more in a second wave.

The imposition of tariffs has been decried by business and governments on all sides of the Canada-U.S.-Mexico borders, since the overall effect would be to threaten the economic wellbeing of businesses and people across all borders.

As a recap, in case you’ve been completely off-grid, the stated reason for the threatened tariffs was, specifically, to stem the tide of illegal immigration and fentanyl.  But the narrative from President Trump regularly strayed into threats against Canadian sovereignty – the not-very-funny joke that turned to not-joking-at-all talk of Canada becoming the 51st state – which served to complicate conversations everywhere, from the highest political levels to rinkside cheers and jeers and everything in between.

Aftermarket organizations have been adamant in their opposition to tariffs. MEMA, possibly the largest association of suppliers to the aftermarket, detailed the massive negative impact that tariffs and a trade war would have on the industry and the driving public it serves.

The following were the key threats outlined by MEMA in the days leading up to the original February 1 announcement.

A Direct Threat to American Jobs and Manufacturing

The vehicle supplier industry is the backbone of U.S. manufacturing, supporting over 930,000 American jobs. Tariffs of this magnitude would drive up costs for manufacturers, reduce investment in U.S. production, and force job losses across the industry.

Higher Costs for Manufacturers and Consumers

A 25% tariff would significantly increase the cost of essential vehicle components, with those added costs inevitably passed down to consumers.

Undermining Supply Chain Resilience and National Security 

Canada and Mexico are the United States’ top automotive trade partners, forming the backbone of a resilient, North American-centred supply chain. Since the implementation of USMCA, regional trade has grown stronger, reducing reliance on China and reinforcing North American economic security. Tariffs would upend this progress.

Following the pause announcement, MEMA declared, “We recognize and respect President Trump’s commitment to addressing critical challenges concerning border security and fentanyl trafficking, and appreciate this opportunity for the three partner nations in North America to engage in productive negotiations. A collaborative, strategic approach will be key to ensuring that these efforts meet their intended goals without disrupting the highly integrated North American supply chain that supports U.S. jobs.”

AIA Canada, for its part, echoes these basic sentiments.

“While the temporary pause on U.S. tariffs provides some relief, our work is far from over,” says Emily Holtby, vice-president, government relations at AIA Canada. “AIA Canada remains steadfast in advocating for the auto care sector, ensuring our concerns are heard at the highest levels of government. We will continue to push for long-term solutions that protect the sector along with Canadian businesses and consumers.”

The reality is that much of the aftermarket activity in Canada is in the distribution segment, as opposed to manufacturing, and the complications of a tariff war – especially when much of the cross-border traffic is within companies – is not something anyone was looking forward to. The phrase “tariff engineering” has probably been spoken more often in the halls of distributors in the past few days than in their entire companies’ histories.

Aftermarket companies have been able to count on a stable set of rules for some time. Adding these complications only adds cost and friction with customers.

In mostly off-the-record conversations, the sentiment has been that little if any of the proposed tariffs would be absorbed by manufacturers or importers, and that they would be passed along, inevitably, to consumers.

It is worth noting that these tariffs would be imposed at import price/valuation, so they would not necessarily equate to a 25% increase in the consumer price. But it could certainly add the equivalent of half that, 12.5%. (How this shakes out for various individual companies would vary, of course.)

In an inflation-averse market, the impact of small increases alone would be crushing – not only economically, but probably politically.

But the truth of it all is that most industry members agree that there is something else at play here beyond the border security issue, and while everyone has welcomed the pause, there is a sense that there is another shoe left to drop.

There is also a sense in Canada that this was a warning shot – that having too heavy a reliance on the U.S. market, both for supply and as customer base, is seen as a vulnerability, when only days ago access to the U.S. market was seen as a strength.

Calls to eliminate interprovincial barriers, to rekindle shelved cross-Canada pipeline projects – since pipelines bound for Canadian refineries pass through the U.S. – and calls to “Buy Canadian” show signs of having staying power.

“While we catch our breath and implement the border measures,” reads a statement from the Canadian Federal of Independent Business, “we can’t afford to take our eyes off the many other critical changes needed to prepare for the future. This means we need to seize the opportunity now to bring in policies that improve our investment climate, reduce taxes, slash red tape and break down internal trade barriers to ensure we are prepared no matter what external threats come our way.”

For an industry so integrated across borders in North America and beyond, hearing the organization speak in term of “threats” from the U.S. is shocking to me. To this point the feeling is that “threat” is very much centred on President Trump.

If that feeling spreads more broadly to the whole of the U.S., that would, in my estimate, be an incredible shame and put at risk hundreds of years of shared – though sometimes bumpy – history, personal relationships, business and even family relationships.

I sure hope it doesn’t come to that.

One thing is, I think, for sure, from this perch north of the border: we now know what the coming federal election is going to be about. And it’s not the carbon tax.