- Canada imposes 25 percent tariff targeting US-built cars that violate USMCA trade rules.
- Officials aim to protect domestic auto jobs while pressuring US trade negotiators hard.
- Mexico-built vehicles and parts are excluded from Canada’s counter-tariff for strategic reasons.
Canada launched a new 25 percent tariffs against cars imported to the nation from the U.S. starting today. The move is a direct response to the tariffs imposed by Donald Trump, but Canada’s approach is different. Rather than a sweeping tariff, this one is more targeted. In addition, the nation has plans to keep automakers producing cars and parts in the Great White North.
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“Canada continues to respond forcefully to all unwarranted and unreasonable tariffs imposed by the U.S. on Canadian products,” Finance Minister François-Philippe Champagne said in a statement. “The government is firmly committed to getting these U.S. tariffs removed as soon as possible, and will protect Canada’s workers, businesses, economy, and industry.”
Read: The Real Victims Of Trump’s Tariffs Might Be American Carmakers Themselves
Canada’s plan to get those tariffs removed is to impose its own. Specifically, a new 25 percent tariff is now in place against cars from the U.S. It’s more strategic than just a blanket tariff, though. Instead, it targets vehicles that aren’t compliant with the Canada-U.S.-Mexico agreement. In addition, those that do comply will still be subject to the tariff if they have parts not from Mexico or Canada.
“What we advised the prime minister was ‘keep parts out of this for now,’” Flavio Volpe, who leads the Automotive Parts Manufacturers’ Association in Canada, told CNBC on Tuesday. “We also insisted that if you’re going to do counter tariffs, make sure you’re targeting American. Don’t by accident or by omission hurt our Mexican sources, partners. Nobody wants to do this … but Canada has to respond.”
All of this seems a bit ironic considering that Trump himself negotiated the USMCA deal, which he is now opposing. Canada appears willing to create a lifeline for some automakers. It’s working on a ‘remission framework’ that would incentivise Canadian production by potentially lightening the tariff penalty. Interestingly, Canada’s labor union is in stark disagreement with the UAW in America about the entire situation.
“There is absolutely no justification for the United States to impose tariffs on Canadian vehicles. Canada did not start this trade war, but we have no choice but to fight. We refuse to back down and sacrifice Canada’s auto jobs and industry on Donald Trump’s alter,” said Unifor National President Lana Payne. At this stage, it’s unclear how long this tariff war will go on, but several nations appear ready to fight rather than simply surrender.
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