June 5, 2026 | Bonus Episode: USMCA’s hidden players: China, the Gordie Howe Bridge and where tariffs land

June 5, 2026 | Bonus Episode: USMCA’s hidden players: China, the Gordie Howe Bridge and where tariffs land Automotive News Daily Drive · Jun 7, 2026

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Person

Dave Patterson

Dave Patterson is the person Ontario sends to handle trade discussions with the U.S. The episode also says he used to work for General Motors in Canada, so he’s speaking from experience.

Company

General Motors Canada

General Motors Canada is GM’s Canadian organization. Here it’s mentioned mainly to explain why Dave Patterson knows the auto industry.

Term

tariffs

Tariffs are taxes a country adds to imported products. If cars or parts get taxed when they cross the border, it can make them more expensive and push companies to build somewhere else.

Term

Effective rate is the real tariff rate after credits or adjustments are applied, rather than the headline percentage. The segment gives an example: with a 25% flat tariff but a credit tied to U.S. content, a “50% US content” scenario yields an effective rate of 12%.

Concept

US content

“US content” means how much of a car (or its parts) comes from the United States. The episode says that if enough of it is U.S.-made, you may qualify for tariff credits that lower what you pay.

Term

rules of origin

Rules of origin are the requirements that decide where a product is considered to be made for trade deals. If a car doesn’t qualify under those rules, it may not get the lower tariff rate.

Term

USTR

USTR is the U.S. government office that handles trade negotiations and trade rules. In this segment, it’s mentioned as the group carefully reviewing how tariffs would work for cars.

LIVE

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Conversations live stream this week on the state of auto trade and USMCA. A panel discussion led

by our own Hannah Lutz and Automotive News Canada's Greg Lason with industry experts Colin Shaw of

MIMA Original Equipment Suppliers, Linda Hassenfratz of Linnimar, and David Ganz of the Baker Institute.

We had more from that conversation than we could fit into Tuesday's show, and it's worth hearing.

The panel gets into some of the more pointed questions from the audience. For example,

whether the Gordy Howe bridge is being used as a negotiating chip in USMCA talks, how a renegotiated

deal would address Chinese parts flowing into North American supply chains, and where automotive

tariffs might realistically land if zero-tariff trade doesn't survive the renegotiation. Here's

that conversation. We have a question from the audience, and I'm going to direct this one to Greg

because I know he's been doing a lot of reporting on this. Is the opening of the Gordy Howe bridge

part of the USMCA negotiations? It is not officially part of the negotiations,

but as I told some folks last week, Donald Trump and his administration leaves no stone unturned.

They are masters at turning anything into a bargaining chip, and that's what they've done

in this case is they have looked at that and said, well, if you don't agree to our terms in USMCA,

then I'm not going to grant permission to open that bridge. And so it applies pressure

at the negotiating table for Canada and the United States. It's not officially part of USMCA.

Could it be? I mean, maybe they could somehow write that in there. I don't know. I'm not

that much of an expert, but what I can tell you right now is no, it is not part of USMCA,

but is being played as a pawn or a chess piece in the negotiating game. And as I said in my

piece, Mayor Drew Dilkins and Windsor said that bridge could open tomorrow if they wanted,

but they're waiting on Donald Trump and officials at the federal level to approve it.

Colin, can you talk more about the importance of that bridge? Have you heard from members?

I mean, it doesn't exist yet, so they can't be relying on it, but what difference it will make

to the transportation of their parts? Yeah, I mean, it helps. We haven't got a ton of

blowback on it, honestly, from our members. It helps free things up, helps things move a little

more seamlessly, gives a little more competition to freight rates, especially in a market where

freight rates, you know, they're under attack from diesel prices, drivers, and rising insurance

costs. So any help that we can get on the freight side is really helpful, and I think the bridge

helps do that here in this area. So the sooner it can be opened, the better, but I'll be honest,

we haven't heard a ton of blowback from our members about the bridge.

Another audience question. What policy measures within or alongside the USMCA could address

concerns about the growing use of Chinese parts and US supply chains while maintaining trade

efficiency and product quality? How would a new version of the USMCA speak to that, the Chinese

parts? There's a few silent partners to USMCA, China being one of them, and they're absolutely,

whether it's China or other non-market economies, I do expect some degree of restriction on

non-market economies to make things more fair and competitive, and I think that's what it's all about.

It's about creating a level playing field here in North America to make sure that we're all

operating under the same investment principles, fair labor practices, those kind of things, and

that's, you know, if we can all meet that, then I don't think any supplier would hesitate to compete

from North America with anybody else abroad, but we have to make sure that those rules

are fair that we're operating in North America.

I think obviously one of the objectives of the Trump administration is to reduce

the importation into Mexico or Canada or anywhere else of parts from outside the US. I'm not sure

that anyone cares about Vietnam at the moment, which is the other non-market economy. Certainly,

China's the focus, but it's worth keeping in mind that GM, for example, imports very substantial

quantities of vehicles and parts from South Korea, their factories there, and so I think if you

reduce the non-North American content to 82% or whatever number from increase it to 72 to 75,

you will probably encourage some manufacturers to make more of their components in North America

and less in China. How big an impact that will be obviously depends on a lot of things like

labor costs in the US and Canada, among others, and also the extent to which potential investors

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we hear from EV and charging analyst Lauren McDonald of Charge Nomics. He breaks down

why big electric pickups have struggled, why things might be different for a smaller,

more efficient electric truck, and why high gas prices could boost hybrids more than full EVs

in the near term. I'm Molly Boygon. Join me on Shift, available this Sunday wherever you get your

podcasts. David, I want to ask you this question. You know, a lot of people almost are resigned to

the fact that there are going to be some sort of automotive tariffs in the next USMCA, or maybe

maybe auto is not included and it's a separate side deal on automotive. In fact, Ontario's trade

representative in Washington, Dave Patterson, who used to work for General Motors Canada, has said,

we're going to have to live with the fact that there's going to be tariffs on auto.

Where do you see those tariffs landing if that's the case? Is this

equal to the tariffs that we see the United States apply to the EU and Japan? Is it less

than that? Is there a number that's been bandied around that? Oh, it's 10% or it's going to be

8% or 12%? Where do you see tariff, you know, airity, if you will? I think there's several

possibilities. Obviously, the EU and Japan and Korea have a 15% tariff, which,

depending on such other things like the lower price of steel and aluminum,

may be very competitive. The flat rate for Canada, Mexico is 25%, but you get a credit. So if it's

a 50% US content, then the effective rate is 12%. I will be surprised if the rates come below

10%, but it's entirely possible. I just don't really... I haven't seen any indication from

the US government or reports from the US government that suggests what the numbers will be.

I'm not at all sure that a 10% or what kind of a tariff has to be put together

to equal the 12.5% effective tariff in this situation. On the other hand, if you don't meet

the rules of origin, and I don't know what the numbers are, 10%, 12%, 15% of the past,

you're paying a 25% tariff, which obviously means it's going to be cheaper to produce

those vehicles somewhere else outside the United States. So I assume USTR is looking very carefully

at these numbers. Hopefully, the Mexican government has been thinking about them as well,

but I would be surprised if it goes to zero again for the vehicles that meet the new rules of origin.

I'd just like to make a quick comment on that, that I think David's probably right,

it doesn't go to zero, but let's envision a scenario where it's somewhere between 0 and 10%,

maybe between 5% and 10%. Personally, I think that in Canada, we can close that gap in terms of

competitiveness with the US plants. Number one, the dollar is going to be on our side in that

calculation. Number two, the Canadian automotive plants are incredibly productive. In fact,

General Motors Oshawa is their most productive plant in the world, GM's most productive plant in

the world. When you combine a little bit of a weaker dollar and incredibly high levels of

productivity and efficiency in the Canadian automotive plants, we can close a gap of 5%

or even 10% in my opinion, but the cost to build that vehicle in Canada versus the cost to build

it in the US would not be dissimilar. Given that, and given that we've heard people within the

industry and our own trade representatives say tariffs are probably here to stay on some level,

then is this renegotiation, while we've focused on Canada for the last 15 months,

is it really about Mexico then, Colin or David? Is that really the issue that Donald Trump has

and Canada has been sort of the play to shift focus and make changes in Mexico?

Well, I think obviously a lot of this is speculation, but if you look at Canada and

Mexico at one level, a Canada and the US on one level, labor costs are relatively similar.

In Mexico, they're about five to one or six to one, so Mexico has a huge labor cost advantage

which probably won't go away, particularly if you get to a 5% or a 10% tariff. How it will

balance is hard to say. The Honda and Toyota and the Big 3 have huge investments and very

productive operations in Canada, so I don't see most of them abandoning that, although we've

seen the salatists do some of that in the last year or so. I don't think it's necessarily

a disaster for the Canadian industry. I think the lower the tariff, whether it's 5% or 10%,

again below 12.5%, the better off Canadian producers are.

I think also on paper, Mexico may have more exports and imports to the United States of

Auto Parts, but if you start looking to the future of what we need to do in this region,

especially if we're going to be asked to decouple from non-market economies,

we absolutely need Canada from a raw material standpoint, critical minerals, things like that,

steel and aluminum, a huge part of Canadian market. There's tooling capacity in Canada,

which we desperately need if we're going to tool and make things in North America.

If you start extrapolating into the future, all three become equally important because of the

needs that we have if we're going to build more manufacturing in North America. We all have to

rely on each other. No one market becomes more dominant or more important than another. I caution

that, okay, on paper, it may look like Mexico is a larger trading partner in automotive,

but extrapolating into the future means that everybody has a part to play and an extremely

important part to play as we start producing higher levels of technology here in the region.

That was more from this week's automotive news, Congress Conversations panel on USMCA and the

state of auto trade. You can find the full conversation on our LinkedIn, Facebook and

YouTube pages, and you can find the full three-week series of stories on trade in North America

at AutoNews.com. Thanks for listening to this bonus episode of the show,

and make sure you come back on Monday for a brand new full episode of Daily Drive.

0:00

14:08

Dave Patterson

General Motors Canada

tariffs

effective rate

US content

rules of origin

USTR

About this episode

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