U.S. President Donald Trump is dealing another tariff blow to Canada, signing an executive order on Wednesday that will hit all non-U.S.-made autos with hefty import levies.
Trump said the United States will be applying a 25 per cent tariff on those imports, but it’s not clear when they would apply.
The president said the auto tariffs will kick in on April 2 but suggested they could start at a base rate of 2.5 per cent.
“What we’re going to be doing is a 25 per cent tariff on all cars that are not made in the United States. If they’re made in the United States, there is absolutely no tariff. We’ll start off with a 2.5 per cent base, which is what we were at, and we’ll go to 25 per cent,” Trump told reporters in the Oval Office.
Autos are the second-largest Canadian export after oil — and by far the most lucrative manufactured product that Canada sells to the world, linked to hundreds of thousands of Canadian jobs.
That makes these tariffs potentially more significant than any of the other trade threats from Trump, including the 10 per cent levy on energy and the 25 per cent tariffs on steel and aluminum.
But the impact will depend on whether the tariffs apply to fully assembled cars or include automotive parts. The U.S. and Canadian auto industry is so integrated that parts often cross the border multiple times.
Shortly after Trump signed the executive order, Ontario Premier Doug Ford said Canada will need to fight the new tariffs — and called for retaliatory tariffs that “maximize the pain for the Americans.”
“I feel terrible for the Americans, but it’s one person, it’s President Trump that is creating this chaos,” he told reporters at Queen’s Park. “We aren’t going to roll over. We’re going to do everything we possibly can.”
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said it’s creating paralyzing uncertainty for the industry — and not just in Canada. The constant, always-evolving tariff threat is also scaring investors in the U.S., he told CBC News.
“[Trump] moves the sticks twice a day,” he said on Wednesday while awaiting the announcement. “You don’t know what to expect when you get up in the morning.”
Speaking before the announcement, Volpe predicted a 25 per cent tariff, but with some exemptions, possibly on North American parts traded under rules in the deal Trump himself made, the Canada-United States-Mexico Agreement.
Canada is, indeed, a rare trading partner for the U.S. Unlike the rest of the world, it actually buys more cars and parts from the U.S. than it sells.
The first Trump administration produced a report on auto tariffs and it barely mentions Canada. It showed that Canada’s share of North American auto production has been relatively stable since the 1980s, and that the real shift has been from U.S. production to Mexico.
But this second Trump administration is more aggressively embracing trade protectionism, and the threat of it, in the hope of steering production to the U.S.
