While the US President Donald Trump’s trade war degenerates, the party’s federal leaders present Canadians on plans that could reinvent the country’s economy and the main supply chains.
But can they work?
Trump announced another series of threatened prices, this time on automotive imports, earlier in the week, which led Prime Minister Mark Carney to suspend his electoral campaign as a liberal leader to focus on Canada’s response as April 2’s tariff is approaching.
Carney called for the construction of Canada’s “economic autonomy” by building a fully integrated Canadian supply chain.
Addressing journalists on Thursday, Carney said that he planned to “integrate the Canadian supply chain after declaring that Canada’s” old relationship “with the United States” is over. “
Carney said Canada’s strategic response plan included “the integration of the supply chain here at the national level”.
He said: “I use a fantasy term – integration upside down in steel, aluminum to help our steel and aluminum industries are used and encourage that backward integration in minerals and critical minerals that we are going to develop.”
The concept of doing more here at home is the one who continues to emerge on the campaign track.
On Friday, the conservative chief Pierre Poilievre spoke of the increase in housing production in Canada, using Canadian wood, which is also faced with American pricing threats.
“We can build millions of new houses with Canadian wood that will get workers from this factory and in Canada forests, can make larger pay checks, which they could bring to houses they can afford to buy,” said Hairy, during a campaign event in A Lumber Mill in BC in British Columbia “
NPD chief Jagmeet Singh said the NPD said the NPD would use “each legal tool” To stop American companies “which has taken public money (and) will not be authorized to empty Canadian factories or to ship machines and tools paid by Canadians.”
“The NPD will demand that the federal departments and agencies – notably the Post of Canada and the RCMP – the purchase of Canadian manufacturing vehicles,” said a party statement.
“To support good jobs here at home, American companies wishing to sell vehicles in Canada would be required to use Canadian manufacturing parts or assemble part of the vehicle in Canada. Singh also undertook to exempt Canadian TPS cars and trucks to support national manufacturing and encourage Canadians to buy Canada. ”
What does “back integration” mean?
Ernan Haruvy, marketing professor at the McGill University Management Faculty who has a doctorate. In economics, explained what the term “back integration” means.
“Back integration simply refers to the integration between the various suppliers and the supply chain,” he said.
“Essentially an integration of different parts of the supply chain into a single coherent and coherent unit that does everything.”
Campected as a liberal leader on Wednesday, before Trump announces his car rates, Carney said that his government would build a “network in Canada for car manufacturing components”.
The average car has around 30,000 individual pieces which go through several stages on a single supply chain.
The raw materials, such as steel and aluminum, are made in an installation, refined to another and added to a car part in a separate installation before it goes to a assembly plant to be installed inside a car before chasing the dealer.
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According to an estimate, only one part crosses the border seven to eight times Before he was assembled in a car.
Explaining his plan to meet Trump’s automotive prices, Carney said: “The heart of CE (plan) is to build the automotive sector and our car supply chain in Canada as much as possible, instead of the cars and go back and forth and get a price each time.”
The term “rear integration” would mean the connection of a subsequent phase of the supply chain, such as a car assembly plant, with an earlier phase, such as a steel or aluminum or critical mineral plant, so that Canadian supplies in these strategic sectors are part of the supply chain for other strategic sectors.
Moshe Lander, economist at Concordia University, said: “Integration behind, as I would understand, is: let’s start with the consumer and work slowly back in the supply chain and ensure that the closest things in the consumer will be produced here in Canada.”
Can it be done in a modern economy?
Lander said it would be “extremely difficult” to have a separate supply chain in the modern economy.
“If we return to the 1950s, it is not so difficult at all. But the fact is that because we have free trade with the United States, Mexico and other countries, we realize that there are certain parts of the production process that we should not do,” he said.
Dennis Darby, president and chief executive officer of Canadian manufacturers and exporters, said the supply chain is so integrated, it would be painful for the industry to separate it.
“Steel could be made in Canada, stamped in the United States and then brought back, assembled in a car here,” said Darby.
Drew Fagan, a professor at the Munk School of Global Affairs and Public Policy at the University of Toronto, said that until the 1960s, the Canadian economy produced goods and services mainly for domestic consumption, in addition to certain exports to the United States and the United Kingdom.
“This changed in particular with regard to cars in 1965 when Canada and the United States concluded a sectoral free trade agreement (the automatic pact), then changed in 1988 with the free trade agreement (NAFTA),” said Fagan, who is also a main advisor at McMillan Vantage Policy Group.
Fagan was also assistant assistant to strategic policy and planning at the Ministry of Foreign Affairs and International Trade, before becoming World Affairs of Canada.
Lander said before the 1950s, the car manufacturing process in North America was clumsy and ineffective. The cars were made in a single factory, start to finish.
The rise of the inventory just in time meant that car companies did not need to store parts and thousands of factories, each focusing on one or two essential parts, overgrowing on the continent.
Trump’s trade war threatens to break this rationalized infrastructure.
Experts say that it would take a significant amount to reorganize certain companies and build entire local industries.
“Whole companies must restructure how they manage their operations,” said Haruvy.
Flavio Volpe, president of the Automotive Parts Manufacturing Association, hopes that Canada could continue to have an automotive industry even with American prices.
“We don’t have a massive market, but we have enough to meet our own demand. All this is rather complicated (and could take) 12 to 18 months to move the offer,” he said.
Volpe said that doing everything in Canada was the most expensive option, but that it is a good emergency plan if Trump’s prices do not disappear.
Could Canadian aluminum make cans or bikes here?
Haruvy said the idea of building an internal supply chain is starting to be much easier when you think beyond the automobile.
For example, several Canadian breweries use cans made in the United States using Canadian aluminum.
Although there are still several stages in the supply chain, aluminum traveling from Quebec to be transformed into cans before returning to Canada, it is not as complicated as making a car.
Fagan added: “It may well be that the cans end up being made in Canada, as it is now more economical due to the prices to make these canada cans than send aluminum to the United States to make the cans and bring them back.”
Haruvey said that Canada’s competitive advantage lies in being an exporter of raw materials and intermediate goods. Regarding consumer goods, Canada produces relatively little.
“We are not exporters of finished products, we are importers of finished products. So all these imports that we could replace with our own production. But it would take a major political company on anyone who is the Prime Minister to encourage domestic production, “he said.
More recently, Fagan said that the Canadian economy turned out to be quite agile and had been able to rotate interior production with a specific product – N95 masks.
“We have seen for Covid, for example, that it was important that Canada or other countries produce their own masks,” he said.
“We had no mask producers. Suddenly, masks become a question of national security. ”