It is clear that the future of auto production lies in Asia, from China to India and elsewhere, fuelled by competitive labour and production capacity — and growing local markets. Photo by AFP via Getty Images/China OUT

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It looks like another hardcore economic policy debate is shaping up around the future of Canada’s auto industry. Both the Conservatives and Liberals have laid out broad strategies to support and return Canadian auto production to at least previous levels. The objective looks like a fantasy in the context of Donald Trump’s own auto trade fantasy. Speaking at a Ford plant in Detroit, Trump said, “We don’t need cars made in Canada … we want to make them here.”

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The U.S. president is just one of multiple obstacles facing the Canadian auto industry as it heads into renegotiation of the Canada-United States-Mexico Agreement (CUSMA) on trade. Early talks are underway, although the U.S. trade representative said Canada is not keeping up with Mexico at the negotiation table.

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That Canada has been lagging in communicating with Washington had been rumoured for some time, perhaps a reflection that the Liberals have yet to nail down a clear strategy. Last month  Prime Minister Mark Carney laid out a somewhat contradictory path forward, signalling that Canada aimed to become less dependent on the United States — while at the same time saying he would prefer a single free North American auto market.

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To help reduce dependence on the U.S. Carney will allow China to import 49,000 electric vehicles into Canada at a low 6.1 per cent tariff — a move that is guaranteed to complicate CUSMA auto trade negotiations. Adding to the uncertainty, Stella Li, executive vice-president with Chinese EV maker BYD, said her company is looking at buying up an existing Canadian carmaker to produce EVs in Canada. How would that fly with Trump? Another Chinese EV maker, Geely, is also looking at Canada.

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Conservative Leader Pierre Poilievre on Sunday produced an outline of his party’s plan for an auto trade pact under CUSMA that would involve maintaining and even expanding the North American auto market via “secure tariff-free access to the U.S. market.” He called Carney’s flirtation with China a “dangerous illusion.”

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Unifor, which represents more than 40,000 Canadian autoworkers, declared Poilievre’s plan unacceptable and flawed. In a polite and collaborative tone, Unifor President Lana Payne said the union shares the objective laid out by Poilievre, which is that if companies want to sell autos in Canada, they must build autos in Canada. She raised several technical issues, but also made it clear that Carney’s plan is equally flawed.

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Any Canadian auto deal is bound to be flawed. Major technical, economic and corporate complications are inevitable, even more so today. An international automobile production revolution is taking place in China and many other countries. In a global context, the Canadian auto industry is an insignificant player narrowly focused on auto industry protectionism.