Donald Trump hits Canada with 25 per cent auto tariffs and threats remain

Separately, the president trimmed back — but did not drop altogether — a threatened 25 per cent tariff on all Canadian and Mexican imports, with a lesser 10 per cent tariff on oil, gas and potash imports, that were tied to Trump’s initial purported border concerns about illegal migration and fentanyl smuggling. Those had already been slightly modified to briefly exempt those that comply with the Canada, United States, Mexico Agreement (CUSMA) rules of origin and other standards until midnight. 

Now, the White House says there will be a zero per cent tariff on goods that comply with the CUSMA, but goods that do not comply would be subject to a 12 per cent “reciprocal tariff.”

It is not clear how much of Canada’s exports do not comply with the trade deal, but federal estimates two weeks ago suggested about 40 per cent don’t, with exporters finding the paperwork too cumbersome.

Marking a historic rupture with trading allies, Trump unveiled his so-called “liberation day” plan to stop other countries from “raping” and “pillaging” the U.S. after North American stock markets closed in order to shield the U.S. president from mounting criticism.

In the Rose Garden of the White House, Trump defied his critics and said his latest global tariffs will “supercharge our domestic industrial base. We will pry open foreign markets and break down foreign trade barriers. And ultimately, more production at home will mean stronger competition and lower prices for consumers.”

Overall, the president will hit all other U.S. trading partners with a baseline 10 per cent tariff to take effect at 12:01 a.m. on April 5.

That baseline ramps up on an individualized basis for countries with which the United States “has the largest trade deficits” and escalated tariffs, the White House says, will take effect at 12:01 a.m. April 9.

The overall scale ranges from the baseline 10 per cent up to a high of 50 per cent on the tiny French islands of St-Pierre and Miquelon, off Newfoundland’s south coast — where seafood exports are a mainstay for a population of under 6,000 people.

Trump said he calculated the pain other countries impose on the U.S. and halved the rate to tailor it to those he sees as the worst offenders.

So he announced reciprocal tariff rates on China at 34 per cent, on the European Union at 20 per cent, Britain at 10 per cent, India at 26 per cent, Japan at 24 per cent, South Korea at 25 per cent, and Taiwan at 32 per cent for example.

Trump has reserved the right to reduce or escalate the tariff level depending on what steps other countries take to align with the U.S. or to retaliate.

The White House says reciprocal tariffs will not stack on top of steel and aluminum tariffs, or any tariffs on foreign made autos, nor will these reciprocal tariffs hit other items Trump intends to penalize in the future, including copper, pharmaceuticals, semiconductors or lumber.

The loonie got a bit of a break as the full details of Wednesday’s announcement became clearer. Within an hour of the Rose Garden ceremony, the Canadian dollar rose by more than half a cent (U.S.) to 70.33 cents, but had given up some of that gain, and was back to 70.10 cents by 6 p.m.

At Queen’s Park, Premier Doug Ford took heart that Canada was not singled out for reciprocal tariffs in addition to Trump’s levies on steel, aluminum and automobiles.

“The positive thing that I saw was we weren’t on that list,” said Ford, who had feared a new layer of tariffs on existing ones.

“But as we all know, that can change hour by hour, day by day,” he added warily.

Trump has once again invoked emergency powers under the International Emergency Economic Powers Act, to levy the reciprocal tariffs to correct trade imbalances in the name of national security.

That’s a law that is subject to review in Congress, and a group of Democratic senators are already seeking to block Trump’s trade actions against Canada.

On Parliament Hill, Prime Minister Mark Carney had detoured off the campaign trail to consult with advisers and the Canada-U.S. cabinet committee. He is expected to soon unveil the next phase of Canada’s countermeasures.

Flavio Volpe, head of the Canadian Auto Parts Manufacturers Association, said in a statement on X that the “math” is still brutal and urged Canadians not to breathe a sigh of relief. He posted “The. Auto. Tariff. Package. Will. Shut. Down. The. Auto. Sector. In. The. USA. And. In. Canada. Don’t be distracted.”

The head of the association representing the Big Three U.S. automakers in Canada wasn’t quite ready to relax even though he said it could have been worse.

Because of the exception for CUSMA-compliant products, Canada’s automotive sector is better placed than other countries around the world, said Brian Kingston, president of the Canadian Vehicle Manufacturers Association.

“The only bright point here for Canada is that because of the integrated nature of our supply chain, a very large proportion of the parts and components that go into vehicles built in Canada is American,” said Kingston.

Still, with other tariffs still looming, including potentially on automotive parts, the Canadian industry is far from out of the woods.

“These tariffs — and in particular if they move forward with automotive parts tariffs — are going to severely disrupt the supply chain built over the better part of 60 years,” said Kingston, adding that higher prices for cars, along with job losses, are a likely result.

Reacting to the 25-per-cent auto tariff Trump said is coming into effect at midnight, David Adams, the head of the Global Automakers of Canada said this will unfairly impact workers on both sides of the border. Adams urged governments in Canada to “think carefully about how to respond effectively to these unjustified tariffs” and look to “long-term solutions” to get them removed.

Media outlets, including the Star, had previously reported that Trump might impose different tiers of tariffs, low, medium or high, on various countries, with Canadian government officials having heard Canada could be on the lower end of the scale. In the past few days, American news outlets reported the American government was looking at a flat rate for its global reciprocal tariffs.

Earlier in Washington, Democratic senators continued to advocate in favour of a resolution to block Trump’s invocation of emergency powers to slap tariffs on Canada.

New York Democratic Sen. Chuck Schumer, minority leader in the senate, said Trump is not basing his tariff attacks on facts. He and the resolution’s sponsor Tim Kaine, a Virginia Democrat, argued Canada is an ally not an adversary in the fight against fentanyl and any border concerns, and tariffs will only impose costs on American consumers and lead to job losses.

“There’s no factual basis here. It’s a crazy idea in his head that hurts American families and does very little benefit,” said Schumer.

Hours before the Trump tariff plan was announced, Conservative Leader Pierre Poilievre outlined his most detailed and combative plan to date in response to the economic threat that has also rattled his campaign hopes.

Poilievre called for targeted counter-tariffs, promised loans for affected businesses, and if he wins the election says he’d “accelerate” talks toward a new economic and security deal with the U.S. while expanding Canada’s energy and resource developments.

Small businesses face special risks from the trade war, said Dan Kelly, CEO of the Canadian Federation of Independent Businesses.

While it’s theoretically easier and quicker to turn around a supply chain for a smaller business, if there’s a shortage of services or goods, suppliers will often take care of their bigger customers first, said Kelly.

“We saw that during the postal strike, and the rush towards couriers around Christmas. The big companies got their packages delivered. A lot of our members didn’t,” said Kelly.

“The first lens that governments have looked at this through is large, export-related businesses, and that’s perfectly understandable,” said Kelly. “You can do some EI measures or bailouts for the auto and steel sectors. But you’ve got to also think about the huge number of small businesses being affected.” 

The head of the Canadian Chamber of Commerce slammed the tariffs, and said the rest of the world is now getting a taste of what Canada and Mexico have been facing for months.

“The world is waking up today to a reality that Canada has been living with for months,” said Chamber CEO Candace Laing.  “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.”

With a file from Rob Ferguson