The federal government said its retaliatory tariffs on U.S. vehicles, which it announced last week with no implementation date, would take effect early Wednesday. The move marks an escalation of the Canada-U.S. trade war in the middle of a federal election campaign, and could increase the price of U.S.-made autos by as much as 25 per cent.
The countertariffs are the first imposed by Mark Carney since he became Prime Minister, and the first enacted during Canada’s 45th general election campaign, which ends with voting on April 28. Responding to U.S. President Donald Trump’s tariffs and his repeated talk of making Canada the 51st state has been central to Mr. Carney’s strategy in the campaign, in which his Liberals are polling ahead of their Conservative competition.
Finance Minister François-Philippe Champagne announced the retaliatory auto tariffs would apply as of 12:01 a.m. ET on Wednesday. The federal government had promised this response after Mr. Trump imposed tariffs on foreign-made automobiles, including from Canada, but had not yet followed through until Tuesday’s abrupt announcement.
“Canada continues to respond forcefully to all unwarranted and unreasonable tariffs imposed by the U.S. on Canadian products,” Mr. Champagne said in a statement. “The government is firmly committed to getting these U.S. tariffs removed as soon as possible, and will protect Canada’s workers, businesses, economy and industry.”
Canada had already imposed countertariffs on about $60-billion worth of U.S. imports in response to levies enacted by Mr. Trump earlier this year on a broad range of goods, including Canadian steel and aluminum.
A trade dispute involving the North American auto sector will not only cost consumers more, but also threatens to damage the structure of an industry that relies on an integrated supply chain across the United States, Canada and Mexico.
Up to 60 per cent of cars purchased in Canada each year are imported from the United States, according to Flavio Volpe, president of the Auto Parts Manufacturers’ Association. He said Canada is the among the largest export markets for American-made cars, and estimated about 1.2 million vehicles are imported from the United States every year.
The tariffs will be 25 per cent on the portion of each vehicle imported from the U.S. that did not originate in Canada or Mexico, in cases where the manufacturing complies with the rules of the United States-Mexico-Canada trade agreement (USMCA). It will also be 25 per cent on each fully assembled vehicle imported from the U.S. where the automobile’s manufacturing does not comply with USMCA rules.
These countermeasures will remain in place until the U.S. eliminates its tariffs against the Canadian auto sector, the federal Finance Department said in a statement.
The government said duties collected will be used to benefit the Canadian auto sector. Vehicle imports from the U.S. totalled $35.6-billion in 2024, Finance said. Last week, Mr. Carney estimated these retaliatory tariffs would collect $8-billion on an annual basis.
Mr. Volpe said Canadians could end up paying 15 per cent to 25 per cent more for a vehicle imported from the United States depending on what portion of the automobile is not Canadian or Mexican content.
On April 3, Mr. Trump imposed tariffs of 25 per cent on Canadian automobiles and light trucks and vowed another 25-per-cent tariff on some Canadian auto parts starting May 3. The tariffs on Canadian-made autos will be reduced based on their U.S.-made content. Most of the vehicles assembled at Ontario’s plants have about 50-per-cent U.S. content.
Mr. Volpe said he believes Canada’s retaliation is justified, even though it will increase prices for cars in Canada. “It will hurt,” he said, but he added that the U.S. will feel the pressure too. “It’s important not to leave these things unanswered,” he said of U.S. protectionism.
He noted that Ottawa’s retaliation, at least for now, does not include counter-tariffs on U.S. auto parts.
The caretaker convention guides the federal government after Parliament has been dissolved and an election called. This means government is supposed to limit itself to routine matters or urgent events but generally not take steps that bind a future government.
Brian Clow, who served as deputy chief of staff to then-prime minister Justin Trudeau, defended Mr. Carney’s decision to impose tariffs during an election campaign.
The Prime Minister was responding to new U.S. tariffs imposed on Canada during the campaign, he noted.
“It’s well-established that the Prime Minister and cabinet can act during a crisis, and I would say that this is a clear crisis,” Mr. Clow said.
Vic Fedeli, Ontario’s Minister of Economic Development, Job Creation and Trade, was in Washington on Monday and Tuesday, lobbying for an end to all the tariffs imposed on Canadian cars and trucks, steel and aluminum – and for the scrapping of the American plan, set to go into effect May 3, to impose 25-per-cent tariffs on non-U.S. auto parts.
In an interview, Mr. Fedeli said he met with automotive industry representatives from both sides of the border and two Republican members of Congress – New York’s Claudia Tenney and Indiana’s Rudy Yakym. He also met with officials in the office of the U.S. Trade Representative.
He says that in addition to making the case against all of the President’s tariffs on Canada, he is also focusing in the short term on convincing the U.S. to leave Canadian auto parts untouched by additional levies.
Mr. Fedeli says his message to U.S. officials is that this will be far too complicated and too damaging to the auto industry’s integrated supply chains that see some car parts cross the border multiple times.
“Nobody can figure out how to do that. It’s so complicated that what we’ve said to them is ‘Look, leave the parts the way they are.’ This is really our message,” Mr. Fedeli said. “You really can’t delve into trying to unscramble that omelette.”
He said so far, the U.S. officials he has met with seem receptive and understand Ontario’s point of view.
Echoing Ontario Premier Doug Ford’s comments last week, Mr. Fedeli said he supported Mr. Carney’s move to impose retaliatory 25-per-cent tariffs on the non-Canadian portion of U.S.-made cars and trucks.
“The people of Canada expect that. We did that last time, in Trump 1.0, we put reciprocal tariffs, we fought back,” Mr. Fedeli said. “And I think they’re a step in the right direction, of course.”
