April 16, 2025 – an updated Position Statement from the Automotive Recyclers of Canada.
Introduction
The recent escalation in trade measures between the United States and Canada has introduced both immediate challenges and long-term considerations for the used auto parts and vehicle recycling sector. As of today, tariffs imposed by the U.S. and Canada are reshaping the flow of automotive goods across the border—and the Automotive Recyclers of Canada (ARC) is actively monitoring and responding to these developments to protect and support our Members.
Background: Tariffs and Trade Tensions
On April 3, 2025, the United States implemented a 25% tariff on imported passenger vehicles and light trucks, citing national security under Section 232 of the Trade Expansion Act. This move affects imports from Canada and other nations, despite the provisions of the Canada–United States–Mexico Agreement (CUSMA/USMCA).
While the 25% tariff on auto parts is scheduled to take effect on May 3, 2025, there is a temporary exemption for parts that qualify under USMCA rules. This short-term reprieve gives the industry a narrow window to assess impact, mitigate risk, and advocate for clarity around the classification of used and remanufactured components.
In response, Canada imposed a 25% retaliatory tariff on non-CUSMA-compliant U.S.-made vehicles, along with duties on the non-Canadian and non-Mexican content of CUSMA-compliant vehicles. Notably, used parts remain exempt from Canada’s countermeasures—an important distinction aimed at shielding our domestic repair and recycling industries from additional cost burdens.
Key Concerns for Canadian Recyclers
While the current measures are aimed at protecting national industries, they introduce new challenges for the used auto parts sector:
- Double Taxation Risk: U.S.-made parts previously exported to Canada and now re-imported may be subject to tariffs again, even if they were already taxed once—an issue that amounts to double taxation and penalizes the reuse economy.
- Increased Costs: These tariffs could drive up the cost of cross-border movement of used parts, impacting affordability for consumers and auto repair businesses.
- Supply Chain Delays: Higher administrative and logistical demands may delay parts movement, especially with uncertainty around the classification of cores and remanufactured goods.
- Classification Challenges: Core parts like engines, transmissions, and electronics often contain components of mixed origin. Determining tariff applicability for these recycled and rebuilt parts is complex, and a misclassification could result in unnecessary costs or compliance issues.
Potential Opportunities in a Changing Landscape
These developments create headwinds, but Canadian recyclers also have potential opportunities:
- Strengthened Domestic Market: Rising trade barriers may prompt a stronger focus on Canadian-sourced ROE (Recycled Original Equipment) parts, reinforcing local supply chains and increasing industry visibility.
- Increased Awareness of Environmental Impact: Policymakers and insurers alike are now paying closer attention to the CO₂ savings and lifecycle benefits of reusing OEM parts, positioning recyclers as critical partners in sustainability.
- Support from CAREC and Gold Seal Certification: As the national environmental standard for auto recyclers, CAREC (Canadian Automotive Recyclers Environmental Code) ensures that ARC Members meet stringent environmental and operational requirements through independent audits. Many of these same recyclers also hold Gold Seal Certification, a recognized industry program that adds a layer of quality assurance, part accuracy, and guaranteed delivery performance. Together, these certifications offer added value and peace of mind to buyers—especially as tariffs and supply chain disruptions make reliability, consistency, and trust more important than ever.
Moving Forward: ARC’s Role and Industry Recommendations
ARC is actively engaging with trade officials, regulators, and industry partners to protect the interests of Canadian recyclers. Here’s how Members can take action:
- Stay Informed – Rely on your provincial association and ARC for the latest verified updates on trade, tariffs, and exemptions.
- Report Cross-Border Issues – Report any delays, unexpected fees, or tariff classification problems to ARC or your provincial association.
- Track Part Origin and Movement – Ensure your documentation systems clearly show the origin, value, and cross-border status of parts.
- Explore Domestic Opportunities – Strengthen your domestic supply and customer base.
- Engage in Dialogue – Attend ARC-led webinars, meetings, and roundtables. Your input helps guide our direction.
Conclusion
ARC recognizes the complexity of the current trade climate and the real concern it poses for recyclers. While the situation continues to evolve, our Members remain united in promoting environmental stewardship, economic resilience, and industry leadership.
By leaning into our collective strength and focusing on proactive solutions, Canadian auto recyclers can navigate these challenges and emerge stronger—with a louder voice in shaping the future of cross-border trade and sustainable vehicle repair.
For more information or to share your experience, please contact: [email protected] www.autorecyclers.ca