Canada will hit the US with a reciprocal 25% tariff on all imported vehicles, Prime Minister Mark Carney announced Thursday — as he called President Trump’s Liberation Day tariffs a “tragedy” for global trade.
Carney said the tariffs will target all vehicles that are not compliant with the US-Mexico-Canada trade deals, assuring Mexico that the new tariffs will not apply to the southern nation.
The prime minister touted that the blow should steer America clear of its protectionist policies, but contended that the trade war may only just be getting started.
“Given the prospective damage to their own people, the American administration should eventually change course,” Carney told reporters. “But I don’t want to give false hope.”
Trump brought a shock to the world economy on Wednesday when he announced sweeping 10% tariffs on nearly all imported goods, including those from key allies such as members of the European Union, Japan and Israel.
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Trump celebrated the move as a “Declaration of Economic Independence,” claiming the move will bring back manufacturers to the US and create more jobs and economic opportunities for Americans.
Canada and Mexico, however, were spared from the baseline tariff and reciprocal levies, including 25% tariffs levied on foreign auto imports, for now.
Canada and Mexico harbor many production plants for American carmakers, which have allowed companies to save on costs as they provide the bulk of vehicles to the US.
America imported nearly $57 million in cars and parts from Canada, according to the Census Bureau, with another $87 billion worth of cars and another $64 billion in parts imported from Mexico, according to the US Commerce Department.
Despite being spared from widespread tariff levy, economists at RBC Capital Markets noted that prices in Canada were still set to rise due to Trump’s policies.
“Tariffs on imports from Canada are still set to rise on Thursday. Auto tariffs announced last week will still push the average US tariff rate on imports from Canada to about 3.5% from 2.5% by our count,” RBC’s Nathan Janzen and Claire Fan said in a statement.
It remains to be seen if the measure will pass the Republican controlled House of Representatives.
Meanwhile in Mexico, President Claudia Sheinbaum avoided conflict with Trump by celebrating that her nation was spared from Trump’s tariffs.
“This has to do with the good relationship we have built between the Mexican and U.S. government, which is based on respect,” Sheinbaum told reporters.
She said her top priority remains to see the tariffs on cars, steel, and aluminium lifted or reduced.
Following Trump’s declaration on Wednesday, four Republican senators broke ranks to block the tariffs against Canada, including the 25% levy on steel and aluminum.
