Thank you, Madam Chair.
Honourable members, thank you for having me here again today as part of your study on the CUSMA review.
As we discussed last time, since the Auto Pact of 1965, Canada has reaped enormous economic and social benefits by being part of the integrated North American auto sector. Through common regulation, competitive supports and, most importantly, duty-free trade, we've been able to manufacture and sell into a market that accounts for annual sales of nearly 20 million vehicles. Just last year, Canada exported about $46.5 billion in vehicles, and 92% of that went to the United States.
It is the CUSMA that's really the foundation for the integrated industry we have today. That agreement provides certainty, reinforces the long-established integration of the auto industry supply chain that is necessary for manufacturers to compete globally, and facilitates the regulatory alignment of vehicle technical regulations with the United States. With this upcoming review of CUSMA, we must do everything possible to, first, renew the agreement and restore certainty for companies that make long-term investment decisions, protect our preferential access into the United States and, ultimately, support this integrated supply chain. We've identified three priorities for your consideration here today, as we prepare for this CUSMA review.
The first is obvious. We must remove the section 232 tariffs on the automotive industry and Canada's retaliatory measures. They are doing enormous damage. Right now, through the first 10 months of the year, automakers have paid $10.6 billion U.S. in tariffs on parts in vehicles that are imported into the United States from Canada and Mexico. That doesn't include steel and aluminum, so the numbers get higher when you look at all the other U.S. tariffs that affect the supply chain.
According to the Center for Automotive Research, that tariff bill is going to hit $188 billion U.S. in the next three years. That's U.S. manufacturers building cars in the United States, so this will significantly weaken the competitiveness of the industry. It has created this bizarre situation in which, right now, it's more cost-effective to build a car in Japan or Germany and send it into America than to build a car in America. This has to be addressed and reversed.
Second, eliminate the federal EV mandate. It won't surprise you to hear me say this. The EV mandate—the electric vehicle availability standard—prioritizes EV sales over the development of our supply chain. It's a direct challenge to our integration, through CUSMA, with the United States, and our competitiveness as an auto-manufacturing jurisdiction, because it levies punitive costs on companies that don't achieve these arbitrary sales targets the federal government has established. Under the regulation, the vehicles manufactured here today, in Canada, are actually being phased out of the Canadian market by that regulation. It's inexplicable that policy would remain in place, particularly given the challenges we're facing. It must be repealed before the CUSMA review process commences.
Last, third, we must align with the United States on the approach to China. As we mentioned when we appeared here last time, we are strongly supportive of what the government has done with respect to the China surtax order, which levies a 100% tariff on Chinese-manufactured EVs. If we are going to secure a trade agreement with the Americans, we simply cannot be out of step with them on China, and we think that the government should do even more. There should be efforts to ban certain Chinese-connected vehicle software—again, aligned with what the U.S. has done—and to strengthen trade policy and investment authorities to ensure we can be more responsive to anti-subsidy investigations and any national security threats in the EV battery supply chain.
It goes without saying that, regardless of the outcome of the CUSMA review, we also recommend that the federal government move quickly to implement policies to enhance our tax and regulatory competitiveness. They're needed to secure both the existing automotive manufacturing footprint and research operations, but also to allow us to compete into the future. The government has implemented many helpful policies over the past few years, but in many instances we've been very reactive to U.S. policy as opposed to proactively putting forward a framework to make Canada ultracompetitive. Now's the time. Regardless of CUSMA, we need to do that.