Mark Carney vows to fight as Donald Trump hits Canada with 25 per cent auto tariffs and more threats loom

The White House kept existing 25 per cent tariffs on Canadian steel and aluminum, and will maintain tariffs — justified under Trump’s alleged border emergency — against Canadian goods that aren’t compliant with the existing North American trade deal that sets rules about limiting foreign content. Under that order, non-compliant goods were hit with 25 per cent import taxes and non-compliant energy and potash with 10 per cent tariffs. 

Carney painted the latest American measures as a body blow that will rollick the international trading system, and noted Trump has signalled there will be new tariffs in “so-called strategic sectors” like pharmaceuticals, lumber and semiconductors. 

“The series of measures will directly affect millions of Canadians,” Carney said. 

“We’re going to fight these tariffs with countermeasures. We are going to protect our workers, and we are going to build the strongest economy in the G7.” 

Carney made the comments after suspending his campaign as Liberal leader in the April 28 federal election, returning to Ottawa for the second time in less than a week to huddle with advisers and cabinet ministers to address the U.S. trade crisis. 

Jean Charest, the former Quebec premier who sits on Carney’s Canada-U.S. advisory council, said Canada got “different treatment” from Europe and others, but not “special treatment” and still got “kicked in the ass” on steel, aluminum and cars. Canadians expressing relief show we are “literally suffering from a Stockholm syndrome” in the face of Trump’s chaos and uncertainty, he said.

However, “good news for us,” Charest said, is that Trump has “re-anchored” the relationship within the CUSMA deal, and said he would use legislation to enact tariffs. That gives Canada a better chance to deploy arguments with elected representatives in the U.S., said Charest, “because then we have a much broader audience with whom we can engage directly and on a local level on all the issues that we care about.”

Carney is expected to roll out a counter-response that Charest said will be “strategic” and “measured.” 

In the end, though, Charest said the country is faced with a “terrible logic: they hurt us and we’re going to hurt ourselves to hurt them. It’s a world of bad choices and making the choice that’s least damaging is where we are.”

Dan Ujczo, an international trade lawyer based in Ohio with the firm Thompson Hine, said Trump’s order Wednesday spared Canada the worst but preserved the tariffs that Trump had imposed or threatened in recent weeks. 

“There’s essentially nothing new on the negative side of the ledger for Canada,” he said. 

Still, Ujczo noted Trump’s new tariff order warned that the U.S. considers it fair — based on Canadian policies it views as trade barriers — to slap Canada with a 12 per cent “reciprocal” tariff. As it stands, that will apply on Canadian goods that don’t comply with the existing North American trade deal, but only if the separate batch of levies linked to Trump’s border emergency are lifted. 

Ujczo warned that the 12 per cent tariff threat could give Trump leverage over Canada in the coming renegotiation of the North American trade deal, explaining that it means all Canadian exports to the United States would get tariffs of at least that much if Trump tore up the agreement. 

“This has made (the North American trade deal talks) potentially more important,” he said. 

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” America after North American stock markets closed in order to shield the U.S. president from mounting criticism.

In after-hours trading, futures options for major U.S. stock indices suggested there could be a huge drop on the markets Thursday. The Dow Jones Industrial Average could drop 2.3 per cent when it opens, while the broader S&P 500 could drop 3.5 per cent, which would translate into more than $1.6 trillion (U.S.) in stock value wiped out.

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

The new tariffs go 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 tariff rate based on the pain other countries impose on the U.S. and then cut it in half to tailor it to those he sees as the worst offenders. He hit China with 34 per cent, the European Union with 20 per cent, Britain with 10 per cent, India with 26 per cent, Japan with 24 per cent, South Korea with 25 per cent, and Taiwan with 32 per cent.

Trump says he will reduce or escalate U.S. tariffs depending on how other countries respond.

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

Flavio Volpe, head of Canada’s Auto Parts Manufacturers’ Association, said in an interview that for the Canadian car and auto parts business, “we did not dodge anything.”

Sectoral auto tariffs of 25 per cent and 25 per cent steel and aluminum tariffs on raw metals and products derived from them are going to “shut down the auto industry” within a week, Volpe warned, saying an industry which operates on single-digit profit margins cannot survive with such heavy penalties.

Brian Kingston, head of the association representing the Big Three U.S. automakers in Canada, said because of the exception for CUSMA-compliant products, Canada’s automotive sector is better placed than other countries around the world.

Kingston, president of the Canadian Vehicle Manufacturers Association, said “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.”

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 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,” said Laing.

With files from Rob Ferguson