U.S. President Donald Trump on Monday threatened to impose a 50% tariff on all Canadian-made cars, trucks and automotive parts starting January 1, 2027, escalating a trade dispute that has already disrupted cross-border commerce.
The proposal follows the collapse of U.S.-Canada trade negotiations last week, with disagreements over tariff relief for medium- and heavy-duty trucks cited as a key stumbling block. Trump framed the move as a response to Canada’s trade practices, stating in a social media post that Canada would be treated as a U.S. state with no tariffs for domestic production.
Canadian Prime Minister Mark Carney, speaking at a press conference in Quebec on Monday, framed the dispute as an attack, saying, 'You're at war when you get attacked.' Carney added that Canada would only return to negotiations if the U.S. approached talks with a 'true partnership' mindset. Canada is scheduled to impose retaliatory tariffs on some U.S. goods on September 8.
The auto industry, which relies on integrated supply chains across the U.S.-Canada border, reacted swiftly. Ford’s shares fell 3.6%, Stellantis dropped 4.2%, General Motors declined 1.6%, Toyota slid 1.5% and Honda fell 2.1% in New York trading on Monday. Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, warned that a 50% tariff on Canadian auto parts would force U.S. assembly lines to halt without access to critical components.
Trade data shows the U.S. and Canada exchanged $872.3 billion in goods and services last year, a 4.6% decline from the prior year. Canada exports roughly three-quarters of its goods to the U.S. and imports nearly half of its goods from its southern neighbor. The standoff has already reduced Canadian imports of U.S. vehicles by 22%.
The dispute follows earlier tensions in January, when Trump threatened 50% tariffs on Canadian aircraft and sought to decertify Bombardier Global Express business jets. Canada later certified several Gulfstream planes the following month, defusing the immediate crisis.
A poll by the Angus Reid Institute released Sunday found that 75% of Canadians approved of Carney’s decision to walk away from negotiations late Friday. U.S. midterm elections are scheduled for November.
