Canada was quick to respond to Trump’s tariff announcement on vehicles built outside the US — a 25 percent tax on vehicles made in the US. Canadian Prime Minister Mark Carney announced the tariff in retaliation to Trump’s tariff announcement, which went into effect on Thursday. Carney said that the tariff collected would be redirected towards the country’s auto industry and the workers.
Just a few hours before the new Trump tariffs came into effect, Stellantis, which has a factory in Windsor, Ontario, where it builds minivans and muscle cars, said it would close the factory for two weeks.
Canada’s 25 percent tariff against US — What’s affected?
Canada’s new tariff will affect fully-built vehicles that will enter the country from the US. Automobiles and automotive spares account for a large portion of Canadian total value, apart from oil and gas. Canada is the largest importer of vehicles from the US and Canadian auto companies send over 90 percent of their goods to the US.
The tariff imposed by Canada will not affect auto parts. Announcing on social media platform X, the Canadian Prime Minister said, “Our tariffs, unlike President Trump’s, will not affect auto parts because we know the benefits of our supply chain. Canada will also develop a support framework for auto producers that incentivises production and investment in Canada.”
Canada has made it clear that it would allow companies that make cars in Canada such as Stellantis, Ford, General Motors, Honda and Toyota to import vehicles built in the United States without paying tariffs. Canada will also allow spare parts to go across the border any number of times before assembly without having to pay tax.
Canada’s 25 percent tariff against US — How does it help the country?
Canada’s Carney gauged that Canada would collect about $5.7 billion from the new tariffs the country was imposing in addition to the approximately $42 billion that Canada would generate from the tariffs it imposed on March 4. That money, according to Carney, would go toward helping workers and businesses affected by the US tariffs.
Carney said, “We take these measures reluctantly. And we take them in ways that are intended and will cause maximum impact in the United States and minimum impact here in Canada.”
