Updated March 17th, 2017

South Riding, Virginia - Conservative leader and current Prime Minister of Canada Stephen Harper recently announced his intention to pledge $1 billion to Canada's embattled auto sector in an effort to stave off the ill effects of drastic tariff reductions that have been proposed under the Trans-Pacific Partnership (TPP). The massive and somewhat controversial trade agreement, which was reached in early October between Canada and eleven other Pacific Rim nations, would essentially place Canadian auto firms at a disadvantage to their Asian competitors due to an elimination of Canadian import tariffs on Japanese automobiles, as well as a new stipulation that places fewer restrictions on manufacturers in terms of the amount of auto parts that are required to come from domestic sources. The deal has been widely criticized as grossly lopsided, being beneficial to Asian suppliers who utilize low-wage workers, while posing as a challenge for Canadian auto manufacturers.

The $1 billion pledge is contingent upon the Conservative government being re-elected, and would be funneled into a federal program known as the Automobile Innovation Fund (AIF), an initiative that provides special repayable loans to automakers who are conducting significant research into green engine technologies. The terms and provisions of the AIF were set to expire in 2017-2018, but Harper's pledge would essentially revive the fund by extending it another decade.

Harper has received criticism for the announcement, with opposing party leaders stating that the Conservative party leader is an "opportunist on trade" due to the potential negative ramifications of the agreement for Canadian families. New Democratic Party of Canada leader Thomas Mulcair said that Mr. Harper's pledge of support for the Canadian auto sector is tantamount to an admission that thousands of Canadian jobs will be lost under the TPP. Mr. Harper downplayed the chances of the TPP bringing any negative effects to vehicle or auto parts makers, which currently employ well over 100,000 people in Canada.

While $1 billion is a large amount of money by most metrics, some auto executives believe that these funds won't go very far over a 10-year period, pointing to the substantial largesse being doled out to automakers in the U.S. and Mexico to finance new manufacturing and assembly plants. Canadian automakers feel that this concern about the insufficiency of the pledge is warranted due to the downtrend in Canada's position as an auto-assembly country; it once was the 4th-largest in the world, but has slipped to 10th place as of 2014. At this point, Canadian automakers are tasked with the duty of adjusting to the terms of the TPP, and while some have a positive outlook on the potential ramifications of the agreement, the ultimate scope of unintended consequences is yet to be determined.

*Always check your owner’s manual for your vehicle model’s specific instructions before attempting any type of repair. Copyright Hogan & Sons Tire and Auto March 2017