Why 25% tariffs on the auto industry still favours Canada

One of the things I have not heard hide nor hair of this year when discussing American tariffs on Canada, and specifically the auto industry, is how the difference in the value of our currency plays into it. Today the Canadian dollar is valued at 70 cents when compared to the US dollar. I.e. The Canadian dollar is 30% less. Which means, even with a 25% tariff, if only applied once, Canadian made autos are still cheaper than American made autos.

Foreign car manufacturers would be wise not to scrap their Canadian plants at a cost of $3 Billion+ but rather expand them knowing two things are bound to happen in the future:

1. The cost of the tariffs to American business will be too great for them to withstand;
2. These tariffs will be short lived because Trump’s time in office is unlikely to survive this term the way things are going. 

So, while Canadians are rightfully angry about the disrespect Trump is showing us, I believe his policies will ultimately result in his demise.

Therefore, I think it’s best to wait him out and invest heavily in Canada in the meantime. Let’s invest in new Canadian made vehicles and bring in more foreign auto makers, making  it easy for them to get established in Canada.