U.S. president-elect Donald Trump’s pledge to impose a 25% tariff on Canadian imports has jeopardized a $7-billion Volkswagen EV battery plant under development in St. Thomas, Ont., says an international trade expert.

Andreas Schotter, an expert in international trade and a professor at Western University’s Ivey Business School, told the London Free Press that the plant could be relocated, resulting in the loss of 3,000 jobs, if Trump follows through on his campaign promise after taking office in January.

“Twenty-five per cent is impossible to absorb,” Schotter told the Free Press. I’m worried about the St. Thomas plant. They may consider relocating because of tariffs.”

Although the site for the plant has been cleared, construction has yet to begin. Volkswagen had previously considered U.S. locations before selecting St. Thomas. The plant, set to open in 2027, will produce EV batteries destined for Volkswagen assembly plants in South Carolina and Tennessee.

Schotter warned that the proposed tariff could force Volkswagen to rethink its commitment to Canada, especially given the high costs of EV battery production.

“The battery makes up about 60% of an EV vehicle’s cost, and a tariff is not sustainable,” he told the Free Press. “I wouldn’t be surprised [if it moved.] They have time,” he told the Free Press.

Volkswagen, however, declined to speculate on how Trump’s proposed tariffs could impact its plans.

“We don’t wish to speculate on any regulatory plans of the new U.S. administration that could have an impact on the framework conditions of the automotive industry,” a Volkswagen spokesperson told the Free Press.

Schotter noted that any tariffs would have negative repercussions on both sides of the border, potentially disrupting $3.6 billion in daily Canada-U.S. trade and jeopardizing nearly nine million American jobs that rely on this economic relationship.

“The U.S. accounts for about 75% of Canadian exports,” he told the Free Press. Schotter said

Key industries like manufacturing, agriculture, energy, and retail could also see significant losses, he added, noting that more than 30 U.S. states count Canada as their largest export market.

Schotter suggested Trump’s tariff threat may be a bargaining tactic to reopen the U.S.-Mexico-Canada Agreement (USMCA), which currently ensures largely tariff-free trade between the three nations. Although the agreement doesn’t expire until 2026, Schotter believes Trump may act sooner.

“In contrast to the first time, he isn’t listening to seasoned civil servants who understand these complications and the negative effect on his own people,” Schotter told the Free Press. “He doesn’t understand it.”

Schotter Trump’s approach as more “threatening and aggressive” than during his first presidency from 2016 to 2020.

Trump has tied the proposed tariffs to Canada and Mexico cracking down on fentanyl and illegal migrants crossing into the U.S. However, Schotter questioned the logic of linking the trade threat to the fentanyl crisis.

The uncertainty surrounding the tariffs casts a shadow over Southwestern Ontario’s economy.

“It’s a reason to be concerned,” he told the Free Press. “I think we need to brace ourselves.”

Pictured: EV battery plant under development in St. Thomas, Ont.

Rendering: Volkswagen Canada