Canada is hitting back at U.S. President Donald Trump’s latest trade offensive, imposing a 25% tariff on vehicles imported from the United States in response to Washington’s new auto tariffs.

Prime Minister Mark Carney, who announced the retaliatory measures Thursday on Parliament Hill, said the tariffs are designed to maximize economic pressure on the United States while minimizing damage to Canada’s own industries.

“We take these measures reluctantly,” Carney said. “And we take them in ways that will cause maximum impact in the United States and minimum impact in Canada.”

The tariffs, which come as part of Canada’s broader $30 billion response to Trump’s trade war, apply to all vehicles that fail to comply with the Canada-U.S.-Mexico Agreement (CUSMA). This means that any car with less than 75% North American content will be slapped with the same 25% tariff that the U.S. has imposed on Canadian-made vehicles.

According to government estimates, the counter-tariffs could generate up to $8 billion, which Carney pledged would go directly to Canadian autoworkers and manufacturers affected by the escalating dispute.

Trade War Takes a Toll on Canada’s Auto Industry

The impact of Trump’s tariffs is already being felt across Canada’s auto sector, a $90 billion industry that employs 125,000 Canadians directly and nearly 500,000 more in related jobs.

In Windsor, Ontario, one of Canada’s largest auto hubs, the effects have been swift. On Wednesday night, Unifor Local 444 confirmed that Stellantis’ Windsor Assembly Plant will be shutting down for at least two weeks, leaving 3,600 workers temporarily out of work. The local union warned that further disruptions could follow as uncertainty looms over the industry.

Ontario Premier Doug Ford, whose province houses the bulk of Canada’s auto production, called the tariffs a “measured response”, while federal opposition leaders scrambled to adjust their campaign messages ahead of the upcoming general election.

Election Campaigns Shift Focus

The intensifying trade war is shaking up Canada’s political landscape as leaders across party lines react to Trump’s economic aggression.

Conservative leader Pierre Poilievre vowed Thursday to remove the GST on all new Canadian-made cars while Trump’s tariffs remain in place. Calling the U.S. administration an unreliable trade partner, Poilievre accused Trump of “betraying America’s best friend and closest ally”.

Meanwhile, NDP leader Jagmeet Singh proposed issuing “victory bonds”, a wartime-style fundraising measure, to help Ottawa fund its counter-tariff strategy. Singh said such bonds would allow Canadians to financially support the government’s fight while also boosting domestic infrastructure projects.

Trump’s Expanding Trade Hostilities

Trump’s latest tariffs are part of a wider trade crackdown that includes:

  • 25% tariffs on all steel and aluminum imports, including from Canada.
  • 10% baseline tariffs on imports from most countries, with additional duties on dozens of foreign goods.
  • The threat of economy-wide tariffs on Canada and Mexico, which Trump has linked to cross-border fentanyl trafficking.

Despite these aggressive trade moves, Carney remained resolute, warning that Trump’s economic policies could rupture the global economy.

“Given the prospective damage to their own people, the American administration should eventually change cours, but I don’t want to give false hope,” Carney said.

He emphasized that Canada’s strategic response funds, CA$2 billion ($1.4 billion) initiative, will help protect Canadian auto jobs and shield the industry from prolonged economic fallout.

Canada Strengthens International Trade Ties

Even as tensions rise with Washington, Canada is looking to strengthen its global trade relationships. Carney spoke with German Chancellor Olaf Scholz on Thursday to discuss expanding economic cooperation, particularly in automotive manufacturing and technology sectors.

Meanwhile, Canada’s initial $30 billion in counter-tariffs, which target American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles, and pulp and paper products, remain in effect.

With both sides refusing to back down, the Canada-U.S. trade war shows no signs of easing. While Trump’s tariffs are expected to inflict pain on American consumers and manufacturers, Carney warned that the road to resolution “may indeed be long and hard on Canadians, just as it will be on other U.S. trade partners.”

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