Trade war escalates: Canada slaps 25% tariff on US vehicles

Canada will impose retaliatory tariffs of up to 25% on U.S.-made vehicles starting today, April 9, marking a sharp escalation in the ongoing trade dispute with the United States and intensifying political tensions in the midst of a federal election campaign.

The federal government announced the move on April 8, fulfilling a pledge to respond to U.S. President Donald Trump's recent tariffs on Canadian automobiles and auto parts, Caliber.Az reports, citing Canadian media.

Prime Minister Mark Carney, whose Liberals are leading in the polls, has made standing up to U.S. trade pressure a key part of his campaign ahead of the April 28 vote.

Finance Minister François-Philippe Champagne said the tariffs would take effect at 12:01 a.m. ET  on April 9. They target fully assembled vehicles imported from the U.S. that do not comply with North American trade rules, as well as non-Canadian or non-Mexican components in U.S.-assembled cars, even if the overall vehicle meets USMCA requirements.

“These countermeasures are a firm response to unjustified U.S. actions,” Champagne said. “We will continue to defend Canadian workers and industry until these tariffs are lifted.”

The tariffs could drive up the cost of American-made cars in Canada by 15% to 25%, depending on the proportion of U.S.-exclusive content, according to Flavio Volpe, head of the Auto Parts Manufacturers’ Association. Around 1.2 million vehicles are imported annually from the U.S., accounting for roughly 60% of new car sales in Canada.

Last week, Carney estimated the new duties would generate $8 billion annually. In 2024, Canada imported $35.6 billion worth of vehicles from the U.S.

The Finance Department said the tariffs would remain in place until the U.S. removes its own levies on Canadian autos, with collected duties redirected to support Canada’s automotive sector.

Trump's administration imposed a 25% tariff on Canadian vehicles and light trucks on April 3, with additional duties on Canadian auto parts set to follow in May. Vehicles assembled in Ontario, which make up a large portion of Canada’s auto exports, typically include about 50% U.S. content.