Mr. Chair and honourable members, thank you for the invitation to appear here today.
The Canadian Vehicle Manufacturers' Association, or CVMA, is the industry association representing Canada's leading manufacturers of light- and heavy-duty motor vehicles. Our membership includes Ford, General Motors and Stellantis.
CVMA members have been operating in Canada for over 100 years. They're responsible for most of the auto production in this country, having built over 100 million vehicles since 1945. Those are the earliest records we have, but of course production goes back further than that.
They're also the largest employers in the auto manufacturing sector, supporting over 20,000 direct jobs, the majority of which are unionized. Simply put, the auto industry and its supply chain would not exist today if it were not for the commitments of Ford, General Motors and Stellantis in Canada.
Now due to U.S. trade actions, the automotive industry is under unprecedented stress. Tariffs of 25% applied on finished vehicles built in Canada fundamentally challenge the existence and future of the industry. Over 90% of production is destined for the U.S. There is no industry without U.S. access. Diversification is not an option as markets in Europe and Asia are better served by assembly plants in those regions.
The future of the industry and the hundreds of thousands of jobs it supports depend on securing our trade relationship with the United States. Because of that, our top priority is to remove the U.S. section 232 tariffs. These tariffs and Canada's retaliatory measures are doing enormous damage to the integrated supply chain. In the first 10 months of this year, automakers will pay $10.6 billion U.S. in tariffs on the vehicles they import from Canada and Mexico. That doesn't include, of course, the additional tariffs on steel and aluminum. According to the Center for Automotive Research, U.S. tariffs alone will cost the U.S. industry $188 billion U.S. over the next three years.
We're now in a situation where it is more cost-effective to manufacture a vehicle in Japan or Germany and export it to the U.S., as opposed to manufacturing in North America for North America. It doesn't make sense.
Once the U.S. tariffs are removed, the renewal of the CUSMA needs to be a priority for the federal government. The CUSMA is the foundation of the integrated North American automotive industry. It provides certainty. It reinforces the long-established integration of the supply chain necessary for our competitiveness and it ultimately facilitates regulatory alignment of vehicle technical regulations. The uncertainty that continues to hang over the industry, and the broader Canadian economy, around the future of Canada's relationship with the U.S. is making it nearly impossible for companies to commit to capital in Canada.
Clearly, securing these outcomes that I've just outlined is not guaranteed and not all within our control. As the Prime Minister has said recently, “In a rapidly changing and uncertain world, Canada's new government is focused on what we can control.” We agree.
There are things in Canada's control that can be implemented today to strengthen the industry and bolster our competitiveness as a manufacturing powerhouse.
Priority one is the elimination of the federal EV mandate known as the electric vehicle availability standard. This regulation is prioritizing EV sales over the development of our North American EV supply chain. It is a direct challenge to our competitiveness as an auto manufacturing jurisdiction because it is levying punitive costs on companies that do not achieve these arbitrary sales targets.
Under this regulation, the vehicles manufactured here in Canada today are being phased out by the government. This is an inexplicable situation.
Compounding that, of course, are federal legal threats against companies and the imposition on auto companies that import from the United States. Auto companies with no Canadian footprint are now better positioned than those that have been building here for over a century as they do not face any tariffs. The result is there's little incentive remaining to build vehicles in Canada today.
We can change this, but we have to have a collaborative effort. With government working with industry and labour to address these challenges, there is a future for this sector.
Thank you for the opportunity. I look forward to all the questions.