Canada has imposed a 25% retaliatory tariff on certain vehicle imports from the US. The tariffs, which are now in effect, target fully assembled vehicles, including commercial vehicles, as well as certain vehicle parts that fail to comply with the Canada-United States-Mexico Agreement (CUSMA).
Canada’s retaliatory tariffs specifically apply to vehicles imported from the US that are either non-compliant with CUSMA or include non-Canadian and non-Mexican content even if they meet CUSMA standards. This effectively means that Tesla vehicles—a common target of Canada’s tariffs ire—will not be affected, as their parts supply chain spans North America.
The US President first announced tariffs on Canadian goods in January, citing concerns about illegal immigration and drug trafficking—despite Canada only accounting for roughly 1% of all fentanyl smuggling into the US. Earlier in April, tariffs on Canadian-made cars and light trucks imported from Canada, with tariffs on car parts expected to follow.
Canadian Finance Minister François-Philippe Champagne characterised his country’s tariffs as a natural response to “unwarranted and unreasonable” US trade policies, stating that they will remain in effect until the US backs down. President Trump has, for his part, indicated he is willing to halve tariffs on Canada if the country meets his demands on drug trafficking. He has also threatened countries that retaliate against the US’ trade measures with escalation.
Newly installed Canadian PM, Mark Carney, has been defiant in his tariffs rhetorics, emphasising “we will win” the trade war when the dust has settled. “We didn’t ask for this fight, but Canadians are always ready when someone drops the gloves.” His party remains open to negotiation with the US.
Carney also characterised Trump’s recently-announced 90-day pause on global tariffs as a “welcome reprieve for the global economy”. These separately-announced tariffs do not affect Canada.
