Paccar’s 300 new layoffs in Sainte‑Thérèse are a rational preemptive move. A 25% U.S. import tariff on medium and heavy trucks kicks in on November 1, so volume shifts to U.S. plants before the duty bites. The cuts, reported, follow prior rounds and hit a plant that “relies heavily on revenue from the United States.”
That reliance becomes a liability when every exported truck risks a 25% price penalty at the border under the latest tariff order.
Shift Production To Dodge Tariffs
The mechanism is simple. A 25% duty on imported trucks destroys cross‑border pricing. Paccar protects margin and market share by loading orders into U.S. capacity in Texas, Ohio, and Washington, then trimming Canadian shifts.
On October 21, Paccar’s CEO framed the new regime as stabilizing, saying it “should bring clarity to the market.” That signals order allocation will favour U.S. assembly where the tariff does not apply. The same release noted over 90% of U.S.‑sold Paccar trucks are built domestically, reinforcing the path of least resistance. The Sainte‑Thérèse plant, which assembles mainly Class 7 Kenworth and Peterbilt models, becomes the swing site when U.S. buyers need tariff‑proof supply.
Two dates floated publicly, October 1 and November 1. The operative date is November 1, per the subsequent order and follow‑up reporting, which superseded the earlier target. That one‑month slip mattered for scheduling cuts and rebooking orders.
Lock In U.S. Market Share
Local labour bears the brunt. Unifor tied earlier Paccar layoffs to U.S. tariffs and demanded a domestic procurement push, arguing, “This announcement clearly demonstrates the urgent need for Canada to adopt a much more ambitious buy local policy.” That is pressure on Ottawa and Quebec to redirect demand, not a quick fix for U.S. tariff exposure.
Control and enforcement sit with Washington. Customs collects the duty, Commerce runs the Section 232 process, and the White House sets timing. With the tariff in force on November 1, Canadian‑built medium and heavy trucks face a structural price handicap on entry, even when they meet USMCA content thresholds. The economic incentive is clear. Keep price parity by moving final assembly to U.S. lines, then use Canada as parts and engineering support until policy changes.
One more quote matters to understand why Canadian production keeps migrating south. On a recent earnings call, Preston Feight said the new truck tariffs will be “good for PACCAR’s customers,” a tell that the company sees reduced uncertainty and cleaner pricing once the rule is live. That usually means fewer ad hoc surcharges and faster quoting from U.S. plants.
What would change this path? A carve‑out for North American trucks, a tariff remission process that actually clears volumes, or a Canadian demand offset large enough to backfill lost U.S. orders. Absent that, Quebec output stays the shock absorber.
