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Aug. 22, 2025 | The week’s top stories and David Paterson talks trade war and negotiations
Aug. 22, 2025 | The week’s top stories and David Paterson talks trade war and negotiations
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About this episode
David Patterson, Ontario's representative in Washington, DC, discusses the ongoing trade war and its implications for the Canadian automotive industry. He shares insights on US auto tariffs, their effects on Canadian manufacturers, and the complexities of negotiations between Canada and the US. The episode also covers key Canadian automotive news, including the uncertain future of GM's Kami plant and the decline in zero-emission vehicle sales. Patterson emphasizes the importance of building relationships in Washington to advocate for Canada's interests in the evolving trade landscape.
Topics:
trade war
US auto tariffs
Canadian automotive industry
GM Kami plant
zero-emission vehicles
negotiations
electric vehicle market
automotive supply chain
Cars:
BrightDrop Zevo
CAMI’s cloudy future; Glencore buys Li-Cycle; ZEV sales tank again. Plus, Ontario's Representative in Washington D.C. David Paterson talks tariffs, the trade war and negotiations.
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Hi everyone and welcome to the August 22nd, 2025 episode of the Automotive News Canada podcast.
I'm your host, Greg Lason, the digital and mobile editor at Automotive News Canada.
Coming to you from just outside Windsor, Ontario, the automotive capital of Canada.
Today on the show, we hear from Ontario's representative in Washington, DC, David Patterson.
The former vice president of corporate and environmental affairs at GM Canada recently
spoke with our Toronto bureau chief, David Kennedy. Patterson discussed the ongoing
trade war with the United States, updated David on how the US auto tariffs are affecting
Canadian automotive, why the US implemented the tariffs in the first place, and he also
gave us some insight into the near medium and long term negotiations.
But first, to look at some of the top Canadian automotive stories of the week.
The future of GM's Kami plant in Ingersoll, Ontario remains murky.
The slow selling electric Chevrolet bright drop delivery van remains the only vehicle on the
production docket there. That's because the automaker and Hyundai have confirmed a
joint venture product will be assembled in the US, not in Ontario.
But one analyst still sees a future for the factory.
Sam Fiorani, vice president of global vehicle forecasting at US based auto forecast solutions,
says Kami is one of the most underutilized factories in Canada.
Unifor continues to lobby GM for added vehicle programs there.
Unifor local 88 plant chair, Mike Van Bockel, still expects the bright drop van to hit its stride,
says Van Bockel. I'm not giving up on the bright drop. I still think it'll come.
It's just not gaining as quickly as we'd hoped.
In related EV news, mining giant Glencore has acquired the key assets of Canada-based
Licycle Holdings Corp. The acquisition is part of a quarter proof bankruptcy sales
process for the EV battery recycling startup. The deal that closed August 7th includes Licycles
partially completed chemical plant in Rochester, New York and battery shredding plants in Ontario,
Germany and the US states of Arizona, Alabama and New York.
Glencore paid $43.6 million Canadian dollars for the assets.
Glencore would not comment on next steps for Licycles recycling assets.
And finally, Canadians continue to hit the brakes when it comes to buying zero-emission
vehicles. Electric and plug-in hybrid vehicle sales totaled $14,090 in June. That's down 35.2%
from June 2024. ZEV sales in Canada stumbled to start 2025 right after the federal government
paused its $5,000 purchase incentive program. That's a look at some of the top Canadian
automotive stories of the week. Coming up, a conversation between our Toronto bureau chief
David Kennedy and Ontario's representative in Washington, DC, David Patterson.
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Welcome back to the Automotive News Canada podcast. I'm your host, Craig Lason.
We'll now hear that conversation between our Toronto Bureau Chief David Kennedy
and Ontario's representative in Washington DC, David Patterson.
Just to get us started, help us understand your role in all this. I know you're a
provincial rep, but down in Washington trying to get all this sorted out. Are you working
in tandem with the Canadian government, directly with the Americans, or a bit of both?
Well, all of the above. I've lived in Washington for about a year and a half now,
and so I'm there as Ontario's representative in Washington, so I deal with the federal level
issues for Ontario there, and I split my time. I work out of the embassy,
so I work very closely with the trade team and other teams from the federal government.
There's about 400 people working out of the embassy in Washington. We're a small and
mighty team of four, but I have spent my time sort of split between getting to know people in the
administration and in Congress as sort of half the time, and then half the time
with outreach to American business, and that's been very important sort of from our
perspective to have influence over the trade agenda. The very best advocates that you can
have are Americans talking to Americans, and then some of my other Ontario colleagues deal
with governors and people at the state level. I do a bit of that, but primarily every state
has a couple of senators and they have amazing staff. I work with Republicans and Democrats
sometimes in the White House and sometimes in Congress, and so that's what we've been doing just
in terms of the arms and legs of building relationships, and now after a year and half of
doing that, it starts to feel that you're much more sort of plugged into the ecosystem
and able to get great information, have relationships with people in the White
House and be able to make a contribution. And before we get too far into the nitty gritty here,
just I'm hoping you can give me an overview. What's the mood for Washington in getting a deal
with Canada, and how high up the chain of command are these talks extending at this point?
Well, the talks are directly with Ambassador Hillman, Dominique LeBlanc, and some of the
you know, the Prime Minister, Chief of Staff. So it's a small group by design,
but the Ambassador and in Ottawa, they work very closely with us in Ontario, and
my background in the auto sector can sometimes be helpful. And similarly, our colleagues from
Alberta or more recently from Manitoba and Quebec, they will also have relationships in,
you know, the aluminum industry or in the agricultural industry or in the energy industry
that can be really, really helpful. And they're superb people. And so, you know, day by day,
it's really important to be in Washington. It's a different perspective than, you know,
when you're in Canada. And so building those relationships there has been important.
It does feel very much like a team where we share information and help each other. And then to
your question about, well, where are we? We are all aware that Prime Minister Carney said a couple
of goalposts that have gone past. But as we went through the month of July, it became pretty
clear that the time was not right for a deal for Canada. And partly it was because we started to
see the deals that were emerging around the world with the other major automotive countries,
such as Japan, South Korea, the EU, see what the kind of, what the IEPA tariff levels were,
which is their base tariff sort of akin to the tariff that we experienced in Canada for fentanyl.
So they saw those tariffs decline in those countries down to, you know, 10 or 15 percent.
And then the 232 tariffs, which is another category of things which covers steel, aluminum,
they kept those at 50 percent pretty much for all of those countries. And they brought
their automotive tariffs for parts and for finished vehicles down from 25 percent to 15.
And of course, you've got to have a program to follow this one because
the EU is still waiting to get clarity as to whether their parts are down at 15. So, but,
you know, it's just like, if you went to the NHL draft, you of course would want to know
what the other teams are doing and who they're going after. So watching
what played out in this kind of musical chairs exercise of deals to mix my metaphors
was really helpful and really important. And frankly, David, it played out in much the same
way as we heard directly from Commerce Secretary Lutnick and Jameson Greer back in March when
Doug Ford and I were in Washington meeting with them. They were very clear that this
would be a period of time where we would see these deals being done and the President would
approve them. I think that frankly, our expectations for the level of tariffs that we'd be satisfied
with were more lower tariffs than what were achieved in some of these other countries.
And therefore sort of bringing Canada and Mexico, the Kuzma countries in at that time
didn't probably make a lot of sense for the Americans in front of the levels that they held
with others and probably didn't make sense for us because we want to make sure that Canadians
are behind the kind of resolution that we have. And so we're still at it. We're still looking
for that. And perhaps it'll be a bit of a two step of hopefully achieving
some more tariff relief on the 232s for Canada because that's our primary,
what we're left with is in a practical world, we have sort of half of the 25% tariff on vehicles.
Back in March, we were working closely with the auto sector in Washington where we
achieved zero tariff on parts, which was a real push and important, and on auto parts. And we
have some exemption on our broader IEPA tariffs as well if you're Kuzma oriented. And those were
really, really important things back in March. They helped sustain a lot of our trade, but
we're not backing off. We want to make sure that we continue to make progress on the 232
tariffs. And then next year we'll be into the Kuzma discussion as well. So there'll be
opportunities to get at some of the outstanding issues. Happy to talk about some of those
as well. But I think right now the focus is on steel for Ontario, aluminum for Quebec and for
all of Canada. And we'd like to do better on where we stand on finished vehicles and of course
maintain our parts at zero tariff. So progress still to be made. Yeah, no doubt. And you mentioned
obviously the about 12.5% probably on average we're looking at with US content coming into
Canadian plants. And you obviously said too that you are willing to not going to deal
August 1st because they saw that come and go. How important is that 0% tariff for the auto
industry, Canada's auto industry in particular? I mean personally I would say that if you look
at what's happening internationally and the kinds of discussions that were held with
the EU, South Korea and Japan, these are not shrinking violets. They have agreed to
some significant tariff levels where they were only really paying about a 2% tariff
to bring most products into the United States before their vehicles are now at 15.
They're steel and aluminum at 50. And they've agreed to those levels. And to me it goes
back to what we've heard right from the beginning from February and March when we were in the White
House dealing with Secretary Lutnick. And that is that tariffs are going to be a feature
of the American landscape for a good while going forward. It's effectively a manufacturing tax
that is paid by US manufacturers. It's a different approach than applying a VAT tax or GST
as we know it. But it is a way to raise revenue for a country that is running a $1.8 trillion
annual deficit and a $38 trillion debt. And so there is some rhyme and reason to the revenue
raising that they're trying to do. And it's important to understand that if you're going
to be able to manage it. So going back to your question, will we be at zero? We'd like to
be. That's what the CUSMA agreement brought us to virtually. And we'd like to get back to that.
But I think there'll be some steps in the interim. And if you are in a relative competitive
advantage to your other major trading partners where most of our trade remains tariff free
under our CUSMA exemptions, but not in the 232 areas, we won't rest on our laurels until
we get better. But yes, as you say, 12.5 on average, sort of half of the 25% on our vehicles.
But if everybody else is at 15, we should be lower than that. And we're quite aware that the UK,
it's a small amount, probably 100,000 Jaguar or whatever vehicles coming in,
but they're coming in at 10%. Lower than the cost of shipping a Honda from
Allison or Chevrolet from Oshawa. And so we have some ground to make up in that regard.
We have some help in that area. And right from the outset in meeting with Secretary Lucknick staff
through March and what have you, they very much see the value in the United States interest in
maintaining that supply chain in North America, maintaining the integration of our economy,
the benefits of that. And they, as they look forward to the things that they want to build the American
economy on in areas such as artificial intelligence and areas such as, well, they're going to need
an awful lot more electricity. You tend to look north, you're going to need our nickel,
you're going to need our potash, you're going to need our aluminum. And so as the Premier
often says, let me translate what we hear the President say in terms of what he doesn't need
into Canadian. They do need us. And they know that. We know that they know that. And so the best
thing is to let's get on and build the economy together. And I think there is appetite for
that, but they needed to get this kind of new global policy moving that was there. He was elected.
He was very clear in his pre-election speeches that this is what he was going to do.
So we can not like it, but we have to live with it. And so let's make sure that we come
off with a stronger advantage than anybody else in the world. We're at that now, but let's get
it even better. Yeah. And it sounds like you kind of expect that to happen in two ways,
addressing some of the particular irritants this fall, and then maybe some of the others
as we get into USMCA negotiations next year. Yeah. I mean, I think that the Prime Minister has done
a really good job, I think much of it in plain sight in terms of offering some things
to the United States that are really important for the United States. And that's kind of
available to them in a deal, I would think. Things such as our defense spending,
very important to the United States, things such as the border, fentanyl. Some of the things
between law enforcement that don't get as much attention are very, very important.
And then there are a number of other sort of real advantages. And now we're starting to see
a play out in the United States where you saw the quarterly reports from General Motors and
Ford and starting to be in plain sight as to what the tariff costs are for those companies,
for steel and aluminum, not just from Canada, but from around the world. And the frustration
that they have, as I say, I spent half my time meeting with American businesses and associations,
the frustration they have is that this is a time we should be focusing on
really accelerating productivity in the auto sector through artificial intelligence,
through machine learning, by looking at new supply chains, integrated supply chains that go
right down to our ability to source nickel, high grade nickel and other really important sources,
create magnets, which are absolutely essential for electric drives, for military, for drones.
And Canada is the perfect partner for all of those types of things. And you combine that with
our AI capability to be able to optimize those supply chains for the future. That's a tool
to compete with the real enemy, which is China. And so we've bought ourselves a bit of time in
terms of the auto sector with China. And you'll know very well, artificial, the automotive news
is where I get a lot of the information that I follow. But if you take a look at just production
out of North America, we would be at about 16 million vehicles when we combine forces,
but China's twice that now. And Europe is at about 12 million, and Japan's at eight,
and South Korea's at four. And so you combine some of those North American numbers with Mexico and
Canada, and you've got a significant block. You've got the resources that are there. And
instead of just working off of low cost labor, you can use artificial intelligence and other
things to be able to really increase productivity. So, you know, in the Traverse City forum that I
usually go to, I see coming up, that's the focus right now is, how do we use machine learning to
accelerate? Those are the things that will go very nicely with electric vehicles as they emerge,
as new battery technologies start to advance. You get into LFP, starting to be a focus in
those plants. And we're very well positioned in Ontario, those plants that we have,
they're going to go ahead. It's someone said to me, I think I love the analogy today is that
the goalposts haven't changed as to where we're going. It's just the yardage per play
that has slowed down a little bit. And so I kind of like that. And I think that's true,
but we're very much in the game and we're an essential partner.
Yeah, excellent. So when it comes to USMCA, I know you kind of alluded there that
it may change when we get into next year, but it sounds like you think there's appetite in Washington
for some sort of USMCA deal to survive next year. I think we will go through the process as it's
been outlined. The next step in the United States for that is to do a public consultation
for a three month period, which we've largely initiated in Canada amongst the provinces, but
they have told us when we met in March that they would not advance that USMCA discussion until
they've really got through this period that culminated on August 1st. And we still have deals
outstanding that they want to do with China, Mexico and Canada. And so there's still work
to be done in those areas. And then they can start they need to trigger a 30 day consultation
with the public. You can do anything. You can cancel the thing with 30 days or 90 days notice
or whatever it is. You can renew the thing. You can renegotiate the thing. You can do all kinds
of things. You can be in Groundhog Day every year doing it. But what we focus on is the issues.
And if we can knock off some of those issues in a deal right now, and Canada is doing some
really important things, for instance, probably the number one thing going right back to talking with
the Democrats before the election is the issue of Chinese transshipment. And it's something that we
see in steel coming through the sort of bookends of North America or getting built into auto
parts and products and kind of working around the USMCA instead of through it. Canada's done
a very good job now on steel so that we actually for the first time not only trace Chinese steel
coming into Canada, we know when it goes out and we can actually prevent and they introduce new
tariffs on steel that comes through third parties from China. That's really important to the
United States. Every conversation in Washington begins and ends with national security. And
China is really the issue. As Premier Ford always says, like, why are we turning our tarot guns at
each other? When really what we're trying to do is build a highly competitive economy against China.
They're building twice as many vehicles as we are in North America. They're ahead on electric
vehicle technology. They're ahead on sourcing of important things like magnets and rare earths
that go into magnets, etc. So we have a lot of work cut out for each other. And we should be
doing it together. I think we'll get there because the economic logic is there. And most
importantly, the American companies are now really starting to push for that and sort of saying,
let's get a break on North American costs. Let's put some certainty into the market
so that people can plan and make investment decisions knowing where we're going to go.
We can fix some of the things like Chinese transshipment. We can look at rules of origin
with new technologies. We can take a look at the trade imbalances that are very important to
President Trump. That's more of a Mexico problem than it is a Canada problem.
And then we can deal with a couple of issues that you hear a lot about, which are
market access issues for things like dairy and Mexico for corn and energy,
digital tax and things like that. And those are probably better done in the context of
Kuzma, I would think. But if we can sort of lay the groundwork with a positive deal,
get some more business certainty, get ahead of inflation in the United States by unleashing
more positive trade in North America, those would all be timely things to do right now.
And it's not just me saying that it's now our auto companies in the United States,
our aviation industry buys a lot of aluminum. Like why do I have to pay 50%
on aluminum from Quebec? These are things that are starting to now
be not just discussed, they're understood. And President's had his hands pretty tight
up in Alaska this week, but maybe next week there'll be more time to think about those things.
No doubt. And when it comes to domestically, I know obviously this is a big issue for Ontario.
Ottawa's counter-tariffs on U.S. vehicle imports and the remission framework
it put in place for automakers that build in Ontario, from where you sit,
is it achieving what it was set out to do? Well, I think, I mean, nobody has been a stronger
advocate for Canada standing up for itself and not getting pushed around than Premier
Doug Ford. And for the first time in my kind of memory on trade issues, the provinces have
stood up and added to that and it's got a fair amount of attention and things like
the LCBO and other aspects and other provinces taking those steps as well. So not being pushed
around, not being taken for granted, when actions are taken that frankly violate
USMCA or its side letters, there's every reason for Canada to stand up for itself.
But the fundamental thing about tariffs that we've all learned is that tariffs are taxes
and they're paid by your own manufacturers. And so if we do counter veil tariffs,
we're raising the price for people that need to buy things that go into other things. We
don't so much trade with each other as we say we build things together and that's a two-way
street. So I spend a fair amount of time with companies that have been caught only with the
counter veil tariffs and not with the initial tariffs from the United States. And so you have
to be careful that's a function of the federal Department of Finance to make the right decisions
in terms of what are the relief measures that you want to do. It's more fine-tuning and
making sure that we're not penalizing ourselves. And I have knowledge of a number of areas where
that's been resolved. I have knowledge of another sort of number of issues. There are companies that
sort of make something and source it from outside of North America and then bake it and put it
in a bag and send it back to the United States and they're not going to qualify for USMCA
exemption. And so those ones are getting hurt a little bit too. But right now, you know, the
vast lion's share of our tariff hit from the United States is these 232 tariffs on steel,
aluminum and automotive. We've got half a tariff on automotive. We've got a full tariff on steel and
aluminum. So there's work to do. Yeah, when it comes to this retaliation, as you mentioned,
you know, Canada has stood up for itself a lot more than other countries. Do you find,
is that hurting or helping in Washington? Well, I'll give you an example. In Washington,
I deal with, because part of the retaliation from the provinces was Ontario's not buying
American alcohol. And that's a billion dollars of US trade that comes into Canada. Who knew?
LCBO is the largest buyer of alcohol in the world. And so I deal with the heads of the
US wine caucus. And, you know, at first, they weren't happy with that confused and trying to
understand why are we being punished with this? And it's a chance to educate them that, well,
there's a billion dollars of your trade that's impacted, but we have 50 billion dollars of
automotive trade that is now also being tariffed. And so we also feel aggrieved in that regard.
The conversation in Congress actually ended up being very good. And as the Premier often says,
there are Republicans all through Washington that don't agree with tariffs on Canada.
They don't agree with tourism getting cut off to Las Vegas. They don't agree with
a lot of the impacts that they're seeing in their own districts.
But they have ceded this round of tariff policy to the President. They've let it play out.
And now they're starting to raise their voices in Congress, and they're starting to raise their
voices in the business community, more so than I've seen since I've been there for a year and a
half, saying, you've done deals with these other countries. Let's do a deal with Canada.
Yeah. Great. And one last one, I know you said, obviously, keeping Canada
competitively a competitive advantage for Canada and auto over Europe, Japan, South Korea,
with the tariffs that they've agreed to is paramount. What about when it comes to competition
with the US? Will we be able to keep our companies in Canada even if there's no
tariff on the US and there is something on Canada? Yeah. I mean, I've talked to the
presidents of all the Canadian companies, the OEMs that are based there. They're obviously
very large parts of our economy. And I think to a company, they are planning to stay.
They are planning to adjust as best they can. And it's not just tariffs. It's important
to understand that there are very significant regulatory changes that you cover that are
happening with the EPA and other things in the United States. And so there are implications that
they need to think through. We've had in Ontario incredible success in landing battery plant
and future-oriented investments for a whole variety of reasons, not tariff-related.
There's a slowdown in EV adoption. That's partly policy in the United States,
but it's not going away. These companies are not changing their move to new technology.
They're just going a little slower. In the meantime, we have gasoline pickup trucks being
produced in certain parts of our auto sector, and we have the ability to move back and
forth. So we may see some slowdowns. We're all familiar with those types of issues,
but I'm pretty confident that we will have a really strong auto sector going forward.
It'll be a bit of a dip for a period of time. I worry a bit about our auto parts companies
a little bit. I worry that there'll be pressure in the United States for people to bid out of
the United States on future product programs to please the president. But we have tremendous
Canadian champion companies in Martin Ray and Linnamar and Magna, and they have significant
capital assets in Canada. They have significant advantages. The Canadian dollar is an advantage.
There are all kinds of things that go into that, and I think we'll get there. I think that
supporting each other and moving through, but at the end of the day, as I say,
the most effective way to influence this and these outcomes is not to whine here in Canada.
It is to mobilize American voices that see in their own self-interest a resolution that also
includes Canada. I'd like to thank David Patterson for his time and my colleague,
David Kennedy, for conducting the interview. If you'd like to be a guest, have a suggestion
or simply want to comment, email me at glason at AutoNews.com. And remember,
you can listen to all our previous podcasts on Spotify, iTunes, Google Play, or on our website,
automotivenews.ca. Just scroll to the podcast hub in the middle of our homepage. And don't forget,
you can follow Automotive News Canada on X, where we're at Auto News Canada. And you can find
me on X under at glason, A-N-C. Finally, find us on LinkedIn. Just search Automotive News
Canada. That does it for this episode of the Automotive News Canada podcast. We hope you'll
join us next time. So long, everybody.
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