Canada to Impose 25% Tariffs on US Autos to Counter Trump's Levies

TMTPOST -- Canada on Thursday immediately responded to the Trump administration with new auto levies at the same tariff rate as the U.S.

Credit：China Central Television

Canadian Prime Minister Mark Carney announced on Thursday the country will impose 25% tariffs on all vehicles imported from the U.S. that are not compliant with United States-Mexico-Canada Agreement (USMCA). The new tariffs will also apply to on the “non-Canadian content” of cars and trucks that are assembled in the U.S., Carney said in a news conference.

While signaling Ottawa’s decision is to copy the U.S. government, Carney noted Canada won’t put new tariffs on auto parts as U.S. President Donald Trump had done. And vehicle content from Mexico under the USMCA will not be targeted, because, according to Carney, the Mexican government is respecting the USMCA agreement. USMC is a trade agreement that Trump's first administration negotiated to replace the decades-old North American Free Trade Agreement.

The new tariffs will apply to C$35.6 billion (US$25.3 billion) worth of imports, a Canadian government spokesperson said. All the money raised from the counter-tariffs will go directly to auto workers and companies impacted by the US levies, Carney said.

The countermeasures came the same day new U.S. auto tariffs came in force. Trump last week signed an executive proclamation to impose a 25% tariff on all automobile imports, effective on eastern daylight time April 3 at 12:01 a.m. He told reporters that the tariff will affect “all cars that not made in the United States.”

Trump added If the cars are “made in the United States, it’s absolutely no tariff.” "We are going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they have been taking over the years," the president states.

Trump on Wednesday announced separate 25% auto tariffs would take effect on April 3, while autos and auto parts are included in a White House fact sheet as goods that will not be affected by the new reciprocal tariffs.

The fact sheet listed some goods will not be subject to the reciprocal tariffs, including articles subject to 50 USC 1702(b); steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs, copper, pharmaceuticals, semiconductors and lumber articles; all articles that may become subject to future Section 232 tariffs; bullion; and energy and other certain minerals that are not available in the United States.

Trump will impose a new blanket 10% tariff on all countries, which will take effect April 5 at 12:01 a.m. Eastern Time, and the countries with which the United States has the largest trade deficits will face an individualized reciprocal higher tariff, effective from April 9 at 12:01 a.m. Eastern Time. All other countries will continue to be subject to the original 10% tariff baseline.

American imports from Canada and Mexico that are compliant with USMCA will be given exemption from the broader tariffs and individual reciprocal tariffs.

Carney has warned that Canada will hit U.S. with retaliatory tariffs these days. In his first phone call with Trump as the leader of Canada, Carney last Friday informed Trump that his government will implement retaliatory tariffs to protect Canadian workers and its economy.

Carney on Tuesday reiterated that Ottawa has planned to retaliate if U.S. President Donald Trump moves ahead with tariffs on Wednesday. Carney on Thursday mentioned his phone call with Trump. “I did advise the president that we would be retaliating against the auto tariffs,” he said.

Carney told reporters the U.S. tariffs will rupture the global economy, and what Trump had done is nothing less than upend the global trading system. He expected the Trump administration would change their course but it will take a long time to see their shift. "Given the prospective damage to their own people, the American administration should eventually change course. But I don't want to give false hope," Carney said.