Canada has announced the implementation of a 25% tariff on certain vehicle imports from the United States, a direct response to similar measures taken by the US.
The new tariffs, which will take effect after midnight on Wednesday, will impact Canadian consumers who purchase specific vehicles or car parts from the US. Canadian Finance Minister Francois-Philippe Champagne confirmed the decision, calling the US tariffs “unwarranted and unreasonable.”
The tariffs come after US President Donald Trump, following his return to office, introduced a series of global taxes targeting key trading partners, including Canada. Trump argues that the tariffs are necessary to correct perceived unfair trade practices.
Although Canada wasn’t directly affected by the latest round of US tariffs, tensions have been rising between the two nations over Trump’s previous trade policies, which have taxed a variety of goods crossing the border. Champagne emphasized Canada’s commitment to protecting its economy, workers, and businesses. “We’ll protect our workers, our businesses, and our economy,” he stated on social media.
According to a government factsheet, Canadian importers will now be required to pay a 25% tax on specific cars and parts imported from the US. The new tariff will apply to:
Fully-assembled vehicles from the US that don’t comply with the CUSMA (Canada-United States-Mexico Agreement).
Any non-Canadian or non-Mexican content in fully-assembled vehicles from the US, even if the vehicles comply with CUSMA.
This move follows earlier promises by Canadian Prime Minister Mark Carney, who vowed a strong response to Trump’s tariffs, amid an ongoing election battle. Tensions have also been heightened by Trump’s controversial remarks about taking over Canada.
On the same day, China also announced retaliatory tariffs on the US, adding to the ongoing trade dispute between the countries.
The Canadian tariffs come in the wake of Trump’s 25% tax on cars entering the US, which took effect recently. A separate tax on car parts is set to begin next month.
These tariffs are especially impactful for Canada, as its car industry is closely tied to that of the US. Earlier rounds of Trump’s tariffs, aimed at pressuring countries like Canada, Mexico, and China to curb illegal immigration and drug trade, had already placed significant strain on trade relations. The US imposed a blanket 25% tax on most Canadian imports, with exceptions under the North American Free Trade Agreement (NAFTA) and lower rates for certain products like energy, potash, aluminum, and steel.
