I suppose I'm not breaking any news if I tell you that the American government is threatening to impose tariffs that could seriously affect our country. Although it's a little unusual for me to talk politics on this blog, such a decision would undoubtedly affect the entire Canadian economy, including tires. Far be it from me to comment on the U.S. President here - this isn't the platform, after all - but sometimes you have to face reality... hard as it may be!
Tariffs = increase?
I'm by no means an economic expert, but one thing seems pretty obvious to everyone: the imposition of tariffs would undoubtedly increase the cost of goods. After all, someone has to pay for them, right? The real question is by how much! The tire market may not be able to avoid it altogether, but in my opinion, Canadian consumers are likely to come out of it less shell-shocked than their cousins to the south.
Indeed, the tire industry here seems to me to be much better able to respond to changing consumer needs than that in the United States. Mexico and Canada, two likely targets of the tariffs, produce about one-fifth of the tires imported by Americans. The President claims that this decision will bring tire production back to the United States. While this is not impossible, retaliatory rubber tariffs in countries like Canada could still cause significant price increases across their markets.
What about vehicles?
Where I think even Canadian consumers will see significant price rises is in the automotive sector. The manufacture of these high-tech items requires significant international collaboration, from raw materials to finished product. In a world where microprocessors are increasingly part of our daily lives, this is even truer.
Considering all this, it is clear to me that any obstacle to free international trade will lead to higher prices in the automotive market. In particular, I think we'll have to keep a close eye on tariffs on aluminum and microchips. As we turn more and more to EVs, our dependence on these two goods continues to grow, and even a slight drop in supply could have major consequences...
