OTTAWO – Canada announced that starting Wednesday, a 25% tariff will be imposed on U.S.-manufactured cars that do not meet the standards of the North American trade agreement.
Prime Minister Mark Carney indicated earlier last week that this measure was imminent, and it came as a reaction to the Trump administration’s imposition of a 25% tariff on all imported automobiles, which affects even those coming from Canada—a close ally and participant in the revamped U.S.-Mexico-Canada Agreement negotiated during Trump's presidency. The updated agreement allows for duty-free shipment of vehicles provided at least seventy-five percent of their component parts are sourced within North America.
The United States' biggest buyer of automobiles is Canada, and experts believe that around 8% of the approximately 750,000 vehicles sent to Canada do not meet the requirements set by the trade agreement.
According to Canada's auto-tariff policy, cars imported from Mexico will remain unaffected. Additionally, Ottawa does not intend to impose taxes on auto parts due to their crucial role in the interconnected supply chain.
"Canada is firmly responding to all unjustified and irrational tariffs levied by the U.S. on our products," stated Finance Minister Francois-Philippe Champagne.
Trump’s auto tariffs have already had ramifications in Canada, with Stellantis temporarily halting production at its auto assembly factory in border city Windsor, Ontario, for two weeks. Trump has also threatened a 25% tariff on foreign-made auto parts — a move that auto-industry leaders here warn could spark a shutdown in automobile production.
Canada emerged from Trump’s Liberation Day trade policy announcement without facing additional tariffs beyond those initially disclosed by the White House. These include a 25% tariff on automobiles, a 25% duty on both steel and aluminum imports, and an extra 25% fee on goods coming from Canada that do not meet USMCA standards.
Send your message to Paul Vieira. Paul.Vieira@wsj.com