OTTAWA — Canadian Prime Minister Mark Carney vowed retaliation to Donald Trump’s latest 25 per cent tariff on all cars and light trucks not made in America, calling it a “direct attack” on Canada and its workers that “will hurt us.”
Canada will respond to the U.S. president’s move with more retaliatory tariffs on American imports with other countermeasures to come, Carney said. But he did not specify what U.S. products would be hit during a hastily organized news conference in Kitchener.
“We need a united front of workers, of labour, of business, of governments to help us navigate these stormy seas,” Carney said at a later rally before returning to Ottawa. He added he was halting his election campaign on Thursday and returning to the capital to meet with the Canada-U.S. cabinet committee to respond to Trump’s latest trade war move.
Speaking Wednesday from the Oval Office, Trump said his new 25 per cent tariff on non-U.S. made autos will “spur growth like you haven’t seen before.” He said the auto import duties would take effect on April 3, and are separate from other so-called “reciprocal” tariffs coming April 2 on America’s allies in retaliation for what the president calls unfair trade practices.
The auto tariff comes on top of 25 per cent steel and aluminum tariffs Trump imposed on March 12 that hit Canadian and Mexican metals sold stateside.
Late Wednesday, the White House posted Trump’s executive order on autos and auto parts. It said the 25 per cent duty will apply to vehicles and all “non-U.S. content” including parts, saying the 2018 Canada-U.S.-Mexico free trade deal never did what Trump intended in terms of increasing production in the U.S. It justified the tariffs as “national security” measures.
However the 25 per cent tariff will not immediately apply to “automobile parts that qualify for preferential treatment under the USMCA” until the U.S. can establish a process to apply it “exclusively to the value of the non-U.S. content of such automobile parts.”
It left industry representatives scrambling to understand what the ultimate impact will be.
Carney — who earlier Wednesday proposed a $2-billion fund to build a more Canada-centered auto industry — said the Trump tariffs violate the continental free trade pact, known in Canada as the CUSMA, and in the States as the USMCA.
“He escalated his attacks. And that’s what these tariffs are. They are attacks on Canada, but they are attacks on our workers,” said Carney who remains prime minister during the election campaign.
Cabinet had anticipated the long-threatened tariffs, and will be able to act quickly against the trade move, Carney said, adding: “He has betrayed our trade agreement.”
Conservative Leader Pierre Poilievre condemned “the unjustified and unprovoked tariffs” and called for retaliatory tariffs against goods and services “that we don’t need, can buy elsewhere, or make ourselves.” He promised affected workers would get “income replacement to put food on the table and money in your bank account. We’ll make sure that businesses directly affected will have the liquidity they need to get through this dispute.”
“This is why I called on Mark Carney to put in place protections for workers before going to an election,” said NDP Leader Jagmeet Singh, “This is not a game. This is serious.”
In after-hours trading, shares of the Big Three Detroit automakers all plunged. Ford was down more than 4.5 per cent by 7 p.m., GM was down almost seven per cent, and Stellantis was down just under four per cent. The news also hit the floundering loonie. The Canadian dollar sank by a fifth of a cent, dropping from 70.02 cents (U.S.) to 69.82 cents in the hour after Trump’s Oval Office appearance.
Trump said the markets will eventually adjust. Auto tariffs alone are expected to generate $100 billion (U.S.) in revenue, and Trump said his overall tariff plan to will generate $600 billion to $1 trillion in revenue to allow the U.S. to reduce its debt and fund a massive tax cut.
The president claims the auto surcharges will drive carmakers and investors to produce vehicles on American soil — a prospect most industry analysts say will take years to achieve.
Trump boasted his tariff plan is already accelerating investment in the U.S. “Before I was elected, we were losing all of our plants and were being built in Mexico and Canada and other places. Now those plants largely have stopped and they’re moving them to our country,” Trump said.
He said the border agency will scrutinize all auto imports closely. “If parts are made in America and a car isn’t, those parts are not going to be taxed or tariffed, and we’ll have very strong policing as far as that’s concerned. For the most part, I think it’s going to lead cars to be made in one location. Right now, a car would be made here, sent to Canada, sent to Mexico, sent all over the place. It’s ridiculous. So this is a very simple system.”
“A tariff of this size and scale could have impacts on production, absolutely raise prices for Americans and consumers across the continent and ultimately slow economic growth across North America,” said Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association.
In an interview, Kingston said he is still “hopeful” some kind of off-ramp can be negotiated, saying the U.S. runs a surplus with Canada in vehicles and parts.
“Canada is the largest export destination for U.S. vehicles by far. The Americans send more to Canada than they do to Germany, China and Mexico combined,” he said. “So I remain hopeful that we’ll find a path forward.”
He urged the Canadian government to take a “pause” before retaliating with counter-tariffs. “Remember tariffs are taxes on America, and so this will have a negative impact on the American economy … I think we need watch that play out before we do anything that can damage our economy.”
Flavio Volpe, head of the Canadian Automotive Parts Manufacturers Association, said of Trump’s statements that “It’s as if he doesn’t understand the industry at all or doesn’t care at all.”
“Cars made in any one of the three countries on this continent are full of parts and raw materials made in any one of the other countries because it makes most sense,” said Volpe, adding “it’s virtually impossible to reverse engineer the American content out.”
The tariffs will mean that a Chevy pickup truck coming from Oshawa for sale in the U.S. will now cost $75,000 (U.S.) instead of costing $60,000, said Volpe, adding it will penalize the American parts manufacturers who made parts for that truck.
Premier Doug Ford said he’d spoken to Carney, and they agree on using more retaliatory tariffs against U.S. imports, while Ford has reserved the right to use electricity export tariffs again.
So far Ottawa has levied countermeasures on about $60 billion worth of American imports entering Canada — tariffs that are paid by the company or individual importing the products. It has identified up to $155 billion of American products to hit. “The last $65 billion — it will hurt,” said Ford.
“We either roll over as a country, he runs us over 15 times and gets what he wants, or we feel a little bit of pain and we fight like we’ve never fought before. I prefer the latter,” said Ford, predicting some auto assembly lines will shut down in both countries soon, and predicting more job losses in America if the April 2 tariffs proceed.
“The president is calling it liberation day, I call it termination day,” said Ford. “I know President Trump likes to tell people ‘you’re fired.’ I didn’t think he meant autoworkers in the U.S. when he said that … you can’t click on a switch and create an auto plant overnight.”
Candace Laing, head of the Canadian Chamber of Commerce, condemned Trump’s move in a written statement, saying “This tax hike puts plants and workers at risk for generations, if not forever.”
Dismayed, Oshawa mayor Dan Carter, whose city has been one of the cornerstones of the automotive manufacturing industry for over a century, said, “There will be pain on both sides of the border.” While it’s too early to understand exactly what the fallout will be, he added, “The most important thing is, we cannot forget about those that will be impacted by these decisions.”
The tariffs means layoffs and plant closures are a certainty, across the entire continent, said Jim Stanford, chief economist at the Centre for Future Work.
The short window before tariffs are scheduled to come into force makes a mockery of the idea that customs officials will be able to get a firm idea on how much of a particular vehicle’s parts come from U.S. sources.
“They spent three years negotiating all this stuff during CUSMA. It’s simply not a feasible thing to imagine within one week,” said Stanford. “The entire industry will be in chaos.”
Earlier this month, Trump had delayed the sectoral auto tariffs after intense lobbying by the Big Three American automakers, GM, Ford and Stellantis.
— With files from Rob Ferguson and Mark Ramzy
