Canada is imposing counter-tariffs that will match U.S. President Donald Trump’s tariffs on vehicles while trying to incentivize automakers to stay put and promising more aid for auto workers, Prime Minister Mark Carney said Thursday.
Carney said Canada will respond by matching the U.S. approach, with 25 per cent tariffs on all vehicles imported from the United States that are not compliant with the CUSMA free trade agreement, and on the non-Canadian content of CUSMA-compliant vehicles from the United States.
“We must respond with both purpose and force. We are a free, sovereign, and ambitious country. We are masters in our own home,” he said.
Carney, who spoke in his role as current prime minister in a caretaker government but is campaigning as Liberal leader, said Canada was preparing a framework for automakers to get relief from Canada’s counter-tariffs, “as long as they maintain their production and investment in our country.”
He estimated that around $8 billion would be raised from Canada’s counter-tariffs. He said that money would go towards providing relief to auto workers who lose their jobs and companies that suffer losses, on top of the promised $2-billion strategic relief fund he has promised if elected.
Carney said the shared Canada-U.S auto sector that was created over decades since the signing of the Auto Pact in 1965 had been disrupted with Trump’s announcement.
“In the year I was born, Canada and the United States signed the Auto Pact, an agreement that ended auto tariffs between our nations and began a 60-year period of close cooperation, partnership, job growth and prosperity. And that era has now ended unless the United States and Canada can agree on a new comprehensive approach.”
Carney said whoever is Canada’s prime minister after the April 28 federal election will meet with Trump to hammer out the details of Canada’s new economic and security relationship with the United States.
“As President Trump and I agreed last week, he and the prime minister of Canada will sit down immediately following the election to find areas of common ground and agreement in a new economic and security partnership,” he said.
Carney said, “Our old relationship of steadily deepening integration with the United States is over.”
However, he added, “The U.S. is still absolutely our ally.”
Conservative Party Leader Pierre Poilievre said Carney’s first call with Trump last week has failed to bring about any progress in the trade war.
“Millions of Canadians woke up to the fear of losing their savings or their jobs. It’s clear that tariffs must end,” Poilievre said during a press conference in Kingston, Ont., Thursday.
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To counter the impact of the auto tariffs, Poilievre said the Conservatives will eliminate the federal sales tax on Canadian-made automobiles, while making it a priority to keep the industry moving and workers keep their jobs.
He also called on provinces to match their policy and remove their portion of provincial sales tax on Canadian made automobiles
“It’s clear that Canadians must stand together and I’m here to reassure Canadians that united we will get through this together,” Poilievre said.
NDP Leader Jagmeet Singh said Ottawa should adopt a “Build Canadian, Buy Canadian” approach to navigating this trade war. He added that the NDP was proposing bringing in “victory bonds,” the kind Canada had during the Second World War.
“A victory bond would be a guaranteed investment where you would purchase a bond, a five-year or a 10-year, and if you hold it to maturity, you would get all the revenue tax-free,” he said.
Ontario Premier Doug Ford, whose province is likely to take the biggest hit from Trump’s auto tariffs, said U.S. booze is going to stay off the shelves at LCBO stores.
A new round of U.S. tariffs hitting Canada’s auto sector is now in effect as President Donald Trump escalates his global trade war that has rattled markets and threatened industries across the world.
At the same time, automaker Stellantis announced that it is halting production on its Windsor, Ont., manufacturing facility for two weeks.
“Please be advised that production for the weeks of April 7, 2025 and April 14, 2025 are cancelled. Production employees must not report to work unless directed by their supervisor,” said a notice from Stellantis to employees, posted to social media by Unifor Local 444.
Stellantis said the primary driver behind the decision is the announcement of tariffs from U.S. President Donald Trump, the union said in a Facebook post.
As of Thursday, a 25 per cent tariff will apply on all imports of foreign-made vehicles, trucks and auto parts going into the United States.
The U.S. has so far imposed 25 per cent tariffs on all Canadian goods, as well as an additional 25 per cent on steel and aluminum imports and a 10 per cent levy on Canadian energy imports.
According to the executive order signed by Trump last week, the auto tariffs will not apply on U.S.-made parts in foreign-made vehicles.
The White House says Trump is taking action to protect the American automobile industry, which it claimed is “vital to national security and has been undermined by excessive imports.”
The auto tariffs come a day after Trump unveiled global “reciprocal” tariffs on dozens of countries and territories, announcing a baseline 10 per cent duty. Canada is not included in that list.
Carney had previously called Trump’s auto tariffs a “direct attack” on Canadian workers.
As the Liberal leader, Carney had to pause his election campaign for a second time in less than a week Wednesday, to coordinate a response to Trump’s announcement on what the U.S. president dubbed as “Liberation Day.”
Carney met with the Canada-U.S. business council on Wednesday. He convened the federal cabinet committee on Canada-U.S. relations and also virtually meeting with Canadian premiers Thursday morning.
Prior to Thursday’s announcement, Canada had already responded to Trump’s trade actions with counter-tariffs on almost $60 billion worth of American goods, which were announced in retaliation for the 25 per cent tariffs on all Canadian goods and a subsequent round that was retaliation for the steel and aluminum tariffs.
The Prime Minister’s Office said the new counter-tariffs on the U.S. auto sector will come into force in the coming days.
Ottawa paused a larger, $125-billion round of retaliatory levies after Trump announced his one-month suspension of the March 4 fentanyl-related tariffs.
The PMO said it pulled items from that list for the metal counter-tariffs it announced last month.
Canadian industry groups are reacting cautiously to Canada not being on Trump’s list of reciprocal tariffs so far.
“This chain reaction of tariffs and counter-tariffs will have a real and distressing economic impact on Americans, Canadians and the global economy. We hope that today’s positioning regarding Canada by the U.S. is part of a path to real negotiation, ultimately leading to long-term partnership focused on continental economic security and resilience,” Candace Laing, president and CEO of the Canadian Chamber of Commerce, said.
Dennis Darby, president and CEO of Canadian Manufacturers and Exporters said the threat to Canada’s economy had not passed.
“The unjustified 25 per cent tariffs on automotive, steel and aluminum products remain in effect. These unfair measures continue to harm manufacturers, workers, supply chains, investment decisions, and overall business confidence,” he said.
The White House has said if the sweeping 25 per cent tariffs imposed on Canada along with Mexico end, then a 12 per cent reciprocal tariff rate would apply.
Economists are warning that Canada is “not out of the woods yet.”
Tu Nguyen, economist at RSM Canada, said Canada’s absence from Trump’s global tariff list was “a small consolation prize.”
“Economic uncertainty remains firmly entrenched, and more tariff announcements could be in the picture in the upcoming months. Businesses should consider strategic investments in areas such as infrastructure and technology to diversify trade partners and bolster their resilience,” she said.
Trump’s trade war that has seen multiple rounds of tariffs on Canadian goods, energy, aluminum and steel has so far dominated the federal election campaign.
All the main federal parties have proposed counter measures to fight back against the U.S. trade actions and repeated threats to make Canada a 51st U.S. state through “economic force.”
The North American auto sector, which is already reeling from Trump’s metal tariffs that were imposed last month, is concerned about the impact these new tariffs will have on workers and the industry at large.
The Global Automakers of Canada has warned the auto tariffs will drive up costs for consumers and impact workers on both sides of the border.
Lana Payne, national president of Unifor, told Motorcycle accident toronto today in an interview Wednesday that Trump’s tariffs will be “very damaging” for the North American industry, which she said is interlinked between Canada, the U.S. and Mexico.
“Potentially what will occur in the auto industry could be the linchpin of a continent-wide recession,” Payne said.
With a file from Reuters