OTTAWA — Canada will slap billions of dollars in counter-tariffs on American imports despite U.S. President Donald Trump’s warning of tariff escalation, says Prime Minister Mark Carney.
Carney said Trump reached out to him Wednesday night to schedule a call. The two have not yet spoken.
But Carney said meanwhile he wanted to be clear that there will be countermeasures, speaking at a news conference in Ottawa, a day after Trump announced what Carney called “unjustified” 25 per cent auto tariffs that the Liberal leader says are a “direct attack” on Canada.
“We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Carney said.
“We won’t back down. We will respond forcefully,” he said. “Nothing is off the table to defend our workers and our country.”
Carney said a third phase of retaliatory measures against U.S. imports will be levied in reply to Trump’s 25 per cent auto tariffs, which the U.S. president unveiled Wednesday. The American duties on non-U.S. made autos and auto parts take effect next Wednesday, as will Canada’s countermeasures.
There is a brief reprieve from the U.S. duties for auto parts that comply with the continental free trade deal’s rules on American content — at least according to the president’s executive order published Wednesday night — until U.S. Customs and Border Protection can figure out a process to apply the tariff to non-U.S. content.
“Perhaps with a comprehensive trade negotiation we can reestablish a bit of trust,” said Carney, following a meeting of his Canada-U.S. cabinet committee in Ottawa, and after speaking with Premier Doug Ford, who chairs the premiers’ group, the Council of the Federation.
At Queen’s Park, Ford said he learned in a 25-minute call with U.S. Commerce Secretary Howard Lutnick late Wednesday night that vehicles assembled in Canada with more than 50 per cent American parts content will not face tariffs.
“To give you a quick breakdown on a very, very high level, a lot of the automobiles that are manufactured here in Ontario have 50, 60 per cent parts from the U.S.,” Ford told reporters, noting tariffs on vehicles with parts percentages below that “could vary” depending on the percentage American components in them.
“The good news for auto part manufacturers, they aren’t going to be touched (by tariffs), which is very, very important, as he knows how integrated the auto trade is,” the premier added, allaying fears that shipments of automobile components — which often cross the border several times on their way to completion — would be hit with the levies in addition to finished vehicles.
Lutnick suggested this should ease concerns of widespread plant shutdowns and layoffs.
“He’s reassuring us that there will be no planned closures,” said Ford, who was doubtful at that claim. “I don’t believe it.”
Ford, who had just got off the phone with Carney, said there could be a first ministers meeting Friday to discuss retaliation measures against the U.S. More tariff details will be revealed next Wednesday, but Ford said he was unable to get any details from Lutnick on what to expect.
Officials in the premier’s office said Ford will talk to the heads of automakers with operations in Canada on Monday.
Trump’s tariffs will cause inflation to the U.S. while Canada will protect its workers, Finance Minister Francois-Philippe Champagne said before Carney spoke.
Trump threatened Thursday in a post on Truth Social to further punish Canada and the European Union if they retaliate against his auto tariffs.
“It’s going to have the impact of having higher prices for US consumers, and at the same time, it’s going to you know, lower competitiveness in the United States,” said Champagne. “So what we have to do is to fight for Canada.”
Carney suspended his election campaign as Liberal leader to briefly return to Ottawa to meet with his Canada-U. S. cabinet committee. He had called Trump’s move a “direct attack on Canada,” and “a direct attack on our workers.”
In the midst of an election campaign, the leaders of all of Canada’s major political parties have backed the use of some form of retaliatory tariffs.
Canada had previously levied two tranches of counter-duties on $60 billion worth of American imports so far, in response to Trump’s tariff threats to date. And it had identified other countermeasures against $65 million worth of U.S. imports- duties that would be paid by Canadian importers.
But representatives of Canadian and global automakers are warning Ottawa to not to impose counter-tariffs immediately, fearing an escalation of an economically damaging dispute.
Brian Kingston, of the Canadian Vehicle Manufacturers’ Association, said in an interview after Trump unveiled auto tariffs that the Canadian government should hold off on counter-tariffs and try to find a negotiated off-ramp from the escalating dispute.
In an interview David Adams, of the Global Automakers of Canada which represents Honda, Toyota, Volkswagen, Hyundai and Kia among other carmakers with manufacturing plants in Canada and the U.S., also urged caution.
“Our producers are obviously concerned about the tariffs that the president has announced and tariffs that have been announced in the past as far as exports going into the United States,” he said. “But I think our other members are equally as concerned about the retaliatory action that the Canadian government might take on vehicles coming into Canada from the United States. So it’s a bit of a two-way whipsaw … as far as tariffs are concerned.”
Carney has said there is a limit to how far Canadian counter-tariffs can go but has not ruled out nontariff measures like “Buy Canadian” procurement decisions or export tariffs on energy, uranium and potash.
Officials have suggested the overall tariff package could go beyond $155 billion. One official said no decision had yet been made on export tariffs, which they called “the ace.”
Jobs and Families Minister Steven MacKinnon said measures to expand eligibility for employment insurance payments will take effect over the next two weeks. On Saturday, he said, Ottawa will drop the waiting period before people can apply for help, and drop the requirement that insured workers exhaust any severance payments before being eligible to receive EI. Next Saturday, the government will equalize the regional unemployment rates used to determine access to and duration of EI benefits, thereby expanding eligibility, he said.
Conservative Leader Pierre Poilievre condemned “the unjustified and unprovoked tariffs” on Wednesday and called for retaliatory tariffs against goods and services “that we don’t need, can buy elsewhere, or make ourselves.” He also 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.”
In a Thursday morning post on Truth Social, Trump warned: “If the European Union works with Canada in order to do economic harm to the USA, large-scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
“We’re always mindful of what the president says. But my job, our job, is to fight for Canadians,” said Champagne. “The Prime Minister was clear yesterday, we even put a fund to support the auto industry in this country … (for a) made in Canada supply chain.”
Champagne said the federal government would protect workers impacted by the tariffs and, when asked about people’s fears that the economy could collapse, the finance minister pivoted to reassurances and did not directly answer.
Art Wheaton, an auto industry education specialist based in the Cornell University ILR School office in Buffalo, said in an interview that Trump’s auto tariffs will not achieve his goal of bringing automotive plants to the U.S. because those projects take years to plan, as well as certainty for investors that a tariff schedule is not on-again, off-again. He said timelines for building such plants are more like 12 to 15 years.
“I think there’s a tremendous amount of fear and chaos that’s created by the tariffs because you have no ability to plan,” he said, so it’s hard to say if “it’ll work for Trump or not,” because tariffs “have to be known … be predictable because you’re talking about investment of billions and billions of dollars.”
Kevin Page, former parliamentary budget officer and head of the Institute of Fiscal Studies and Democracy at the University of Ottawa, said in an interview this week that the economy will not collapse but Canada is likely to face a recession due to Trump’s tariff wars.
“The geopolitical uncertainties could have a worse impact,” he said.
“It’s not just that the stock markets get rattled. It’s also that people start to feel that it’s going to get worse. And then everybody slows down. Everybody stops spending.”
However, he said, the bigger picture of the government’s finances shows Ottawa can weather the storm ahead and is in a position to support the hardest hit sectors and workers.
“Our debt to GDP numbers are better than other countries, much, much better than the United States. So we could provide that kind of shock absorber if — depending on what happens — it can help Canadians. So in that sense, like, you know, we have some built-in resilience.”
With files from Rob Ferguson
