Canada Retaliates With 25 Percent Tariff on US Cars

Friday 04 April 2025 - 08:30

By: Zahouani Ilham

Canada Retaliates With 25 Percent Tariff on US Cars

Canadian Prime Minister Mark Carney has announced a 25% tariff on certain American-made vehicles, a direct response to a similar tax imposed earlier by the United States on all imported automobiles.

According to Carney, this new Canadian measure targets all US-imported vehicles that do not comply with the United States-Mexico-Canada Agreement (USMCA). The Canadian tariff, which will affect imports valued at 8 billion Canadian dollars (approximately 5.7 billion US dollars), is expected to take effect in the coming days.

The policy specifically impacts cars and trucks made with less than 75% North American components—about 10% of the vehicles exported from the US to Canada, equating to roughly 67,000 vehicles annually.

Although Canada was initially spared from a new wave of US tariffs that now impose at least a 10% tax on nearly all foreign imports, it remains affected by existing American duties on steel, aluminum, and now automobiles.

Stellantis, a major global automaker, responded by halting production for two weeks at its Windsor, Ontario plant as the tariffs went into effect.

Carney warned that the ongoing trade conflict triggered by US President Donald Trump risks disrupting the global economy. He stated that the post-World War II trade system led by the US and long relied upon by Canada no longer exists.

"The 80-year era in which the United States played a leading role in the global economy, built alliances rooted in trust and mutual respect, and championed free trade in goods and services, has come to an end," said Carney.

In retaliation, Canada had already placed tariffs on US consumer goods and metals totaling 60 billion Canadian dollars—30 billion each on aluminum and steel, and on various consumer products.

During a phone call last week, Carney and Trump agreed to revisit bilateral trade discussions after Canada’s legislative elections on April 28.

Currently, Canadian and Mexican products that meet USMCA requirements remain exempt from the new US tariffs. All others are now subject to duties of up to 25% since March.