As a background to this statement by Carney, the Canadian Industrial Minister Mélanie Joly, recently announced that the Canadian government would subsidize Honda to keep them in Canada by paying $313 million for retooling the Alliston plant that makes the Honda CRV model.
The net result is Honda will spend $165 million; Canada will spend $313 million. There are roughly 4,000 auto-sector jobs associated. So, Canada is paying two-thirds of the cost for Honda to stay operating in Alliston. Honda will be producing a new hybrid CRV there.
Against the backdrop of this decision by the Carney government, a transparently visible bribe just to keep Honda from leaving the area, and against the backdrop of the U.S trade position that cars for the American market should be made in America, Prime Minister Mark Carney is questioned about the trade discussions.
Within his response Carney notes the auto-sector is a RED LINE for Canada, and the Canadian government demands access to the American market for cars made in Canada.
The core of the issue is really simple. Canada has chosen to chase climate change energy policy. As a consequence, Canada no longer has heavy industrial manufacturing at scale. In the auto sector the heavy industrial part of making forged iron, steel and aluminum is not done in Canada. Instead, they import the component parts from heavy industrial manufacturing, then assemble those products into vehicles “made in Canada.”
This is a core part of the Canadian auto industry. Without the import, their ‘climate friendly’ economy doesn’t have the manufacturing capacity to create automobiles. The second aspect is they don’t have enough customers; Canada is dependent on the U.S. consumer base to purchase cars, trucks and SUV’s made in Canada.
Prime Minister Carney’s position is zero-sum. The United States must purchase Canadian assembled vehicles or else…. The “or else” is undefined because in reality they don’t have any leverage.
