Trump threatens 50% tariffs on Canadian autos and auto parts

Donald Trump watches the NTT INDYCAR Series Sunday in Washington. Monday the U.S. President threatened higher tariffs against Canada's auto industry. Photo by Mike Kropf/Getty Images

Article content

United States President Donald Trump on Monday announced that he plans to raise tariffs on Canadian autos and auto parts to 50 per cent starting in January, marking the latest escalation of trade tensions between the two countries.

Article content

“On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%, Trump wrote on the social media site Truth Social. “Build in the U.S. and there are ZERO TARIFFS. Canada will be treated like a State no longer!”

Article content

Article content

Article content

The announcement comes after U.S. tariffs targeting $28-billion worth of Canadian goods went into effect on Saturday following the breakdown of talks between Washington and Ottawa on Friday night.

Article content

Article content

Prime Minister Mark Carney, who likened the U.S. trade demands to an attack, said Canada would retaliate with dollar-for-dollar tariffs of its own on Sept. 8.

Article content

Tariffs on autos were a central part of the tensions that ultimately derailed the trade discussions on Friday.

Article content

For decades, the two countries’ auto sectors have been integrated with many of the same companies building autos and shipping parts back and forth over the border.

Article content

Currently, the Canadian auto sector faces a 25 per cent tariff on vehicles exported to the U.S., but that amount can be lowered based on the percentage of U.S. parts contained within a vehicle.

Article content

There was talk during the latest negotiations of lowering the tariff to 15 per cent, but Carney said Saturday that the U.S. had not been willing to extend that rate to medium or heavy vehicles such as trucks.

Article content

That exclusion would have hurt companies such as Ford Motor Co., which recently invested billions of dollars to build F-Series pick-up trucks in Oakville, and General Motors Company, which builds pick-ups in Oshawa, as well as some bus manufacturers.

Article content

Initial reaction suggested Canadian industry leaders were taking this latest threat in stride.
One executive, granted anonymity because of the sensitivity of the matter, said the four-month wait undercut the severity of Trump’s threat.

Article content

More to come …

Article content