The trade war started by US President Donald Trump has no precedent for Niagara Motors’ new car sales manager Troy Milinkovich. Because of that, it is difficult for him to predict exactly how it will affect the Niagara Stone Road Buick and GMC dealership.
“There are so many different opinions out there, we’re really not sure how this is going to roll out,” Milinkovih told The Local.
What many don’t realize, he suggested, is exactly how many of the components in the cars they drive come from manufacturers all over the world.
For instance, General Motors produces the company’s Gen 5 V8 engines and C8 dual clutch transmissions at the nearby Glendale Avenue Propulsion plant. Those engines and transmissions are then shipped to assembly plants worldwide.
In the United States, those units could be destined for GM assembly operations in Flint, Michigan, Wentzville, Missouri or Fort Wayne, Indiana. If an engine costs in the vicinity of $15,000 for one of those plants to purchase, a 25 percent tariff on that would increase the cost by an extra $3,750.
“But what other components go into those vehicles from plants in Windsor and Oshawa?” asks Milinkovich. “It’s probably a lot more than just engines. It’s really convoluted. GM has plants all over the world. We source from South Korea, some of our Buicks are from Asia and China. We have trucks, Terrains and Equinoxes coming out of Mexico, too.”
There is a GM assembly plant in Oshawa, too, which rolls out Chevy Silverado trucks in both heavy- and light-duty versions. Many of those Silverados are shipped to the US market, where Chevrolets outsell GMC trucks. The opposite is true in Canada.
“The price of the Silverados sold there could skyrocket because of tariffs,” said Milinkovich. “We could end up with a situation where a Silverado would be much cheaper here in Canada than in the States.”
And, of course, higher prices for new cars could make used cars much more popular to consumers.
Mininkovich uses terms such as anxiety and trepidation to describe the emotions of Niagara Motors’ staff and customers.
Trump first floated the idea of sweeping 25 percent tariffs on Canadian goods entering the US on January 20. They were expected to be in place on February 1, but he ended up pushing the date back to March 4. The next day, he paused tariffs on cars coming into the United States from Canada and Mexico for another month.
That long, drawn-out chain of events has allowed Niagara Motors to stock up on inventory in anticipation of the tariffs finally taking full effect. It’s a strategy they didn’t have a chance to do five years ago when the COVID-19 pandemic caused a major shortage of new cars and their lot was nearly empty.
“We ordered heavily, so anything that we have in inventory will not be affected,” Milinkovich explains of their preparations for the trade war. “That’s a blessing, but we’re also carrying about $12 million in inventory right now, and that costs money.”
The Niagara Motors sales staff has been encouraging customers who are considering buying new cars and trucks to place their orders as soon as possible. That way, he explains, they will be price-protected.
“But will they be tariff-protected, I don’t know,” Milinkovich adds.
One advantage the Virgil business owned by the Dick family seems to have over many others is that Niagara Motors is not part of a larger ownership group, such as the Performance Group of companies in St. Catharines.
“We do business on a handshake,” insists Milinkovich. “We always deal in good faith. If a customer’s model ends up being adversely impacted by the tariffs, we’ll just keep the product and sell it to someone else.”
Like others, Milinkovich worries about the broad effect the whole trade war could have on the economy.
“You have to remember for every one job in the auto industry there is a spinoff of six other jobs,” he warns. “Trump doesn’t get it. This will affect the Americans as much as it will affect us. It could fuel inflation and that could increase interest rates, affecting housing prices. It will have a nasty ripple effect in my opinion.”