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In a firm response to the United States’ latest trade measures, Canada has begun imposing a 25% tariff on certain vehicle imports from its southern neighbour. The move comes as retaliation against similar tariffs introduced by the US, escalating ongoing tensions between the two close trading partners.
The new import taxes, effective from midnight on Wednesday, target specific automobiles and parts entering Canada from the US. Canadian Finance Minister François-Philippe Champagne announced the measure on X, calling the American tariffs “unwarranted and unreasonable,” and affirming that Canada will take decisive action to protect its workers, businesses, and broader economy.
The Canadian government clarified that the 25% tax would apply to:
- Fully-assembled vehicles imported from the US that do not comply with the CUSMA North American free-trade agreement;
- Any “non-Canadian and non-Mexican content” included in fully-assembled vehicles arriving from the US—even if those vehicles technically comply with CUSMA.
Although Canada was not directly impacted by the newest round of American tariffs, the retaliatory move follows a wider dispute over President Donald Trump’s continued imposition of protectionist trade policies. Trump, after returning to power, has implemented a series of global tariffs, some of which directly target top US trading partners such as Canada.
Canadian Prime Minister Mark Carney, currently engaged in an election campaign, had previously vowed a robust response to the US actions. Trump has further inflamed tensions with provocative statements about potentially “taking over” Canada—remarks that have sparked strong backlash from Canadians.
Trump’s new 25% tariffs on vehicle imports into the US came into effect alongside the Canadian countermeasures, with additional taxes on car parts set to begin next month. These developments are especially damaging for Canada’s automotive sector, which remains deeply integrated with US supply chains.
Previously, Canada, China, and Mexico were caught up in earlier rounds of US tariffs. Those taxes, initially aimed at curbing illegal migration and drug trafficking into the US, resulted in sweeping 25% import duties on most goods from Canada, except those falling under the North American trade agreement. Energy, potash, aluminium, and steel were subject to lower tariff rates.
Later the same day, China followed suit by announcing its own retaliatory measures against the US, further intensifying the global trade tensions.
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