Canada Imposes 25% Tariff on U.S. Vehicles After Trump's 25% Auto Tariffs

Canadian Prime Minister Mark Carney, a former central banker, has criticized U.S. President Donald Trump's 25% auto tariffs, labeling them as "misguided." In response to these tariffs, which took effect on April 3, 2025, Carney announced that Canada would impose a reciprocal 25% tariff on vehicles imported from the United States. This decision was made during a phone call between Carney and Trump the previous week, where Carney informed Trump of Canada's intention to retaliate.

Carney emphasized that these measures were taken reluctantly and were designed to have the maximum impact on the United States while minimizing the effect on Canada. He noted that Canada would not impose tariffs on auto parts, recognizing the benefits of the integrated auto sector between the two countries. The parts often cross the Canada-U.S. border multiple times before being fully assembled in Ontario or Michigan.

The impact of these tariffs is already being felt in Canada. Automaker Stellantis shut down its assembly plant in Windsor, Canada, for two weeks starting April 7, 2025. This closure is expected to affect 3,600 auto workers. Carney had met with these workers the previous week and announced a CA$2 billion ($1.4 billion) "strategic response fund" to protect Canadian auto jobs affected by Trump’s tariffs.

Carney also highlighted that autos are Canada’s second-largest export, employing 125,000 Canadians directly and nearly 500,000 in related industries. He expressed concern over potential further tariffs on pharmaceuticals, lumber, and semiconductors, which Trump had previously placed on Canada’s steel and aluminum.

Carney, who has a background as a central banker in both Canada and the U.K., stated that Trump’s actions would have repercussions not only in Canada but also globally. He described the tariffs as "unjustified and unwarranted" and predicted that the U.S. administration would eventually change course due to the damage inflicted on their own people. However, he acknowledged that this change might take a long time and would be challenging for Canadians and other U.S. partners.

Canada’s initial $30 billion Canadian (US$21 billion) worth of retaliatory tariffs remain in place, targeting items such as American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles, and certain pulp and paper products. Carney suspended his election campaign to return to Ottawa to address Trump's tariffs.

Opposition Conservative leader Pierre Poilievre proposed removing the federal tax on Canadian-made vehicles, while Ontario Premier Doug Ford, whose province hosts the bulk of Canada’s auto industry, described Canada’s latest tariffs as a "measured response."