Trump threatens 50% tariffs on all cars and trucks from Canada amid trade fight

President Donald Trump has threatened to raise U.S. tariffs on cars, trucks and automotive parts imported from Canada to 50% from January 1, following the breakdown of trade negotiations between the two countries.

The proposed increase comes after talks collapsed over several unresolved issues, including whether tariff exemptions would cover medium- and heavy-duty trucks.

Under the agreement that was being discussed, tariffs on Canadian cars and light trucks would have fallen from 25% to 15%, while duties on Canadian steel and aluminium would have been reduced from 50% to 25%.

Trump stepped up his criticism of Canada on Monday, arguing that vehicles produced in the United States would face no tariffs and accusing Canada of taking advantage of the U.S.

Canada remains one of America’s largest trading partners. Trade in goods and services between the two countries reached $872.3 billion last year, although the figure was down 4.6% from the previous year.

The two countries’ automotive industries are closely linked, with U.S. manufacturers relying heavily on parts and production facilities in both Canada and Mexico. Industry officials warn that higher tariffs could therefore disrupt vehicle manufacturing in the United States.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said a tariff on Canadian auto parts would ultimately hurt U.S. assembly plants because production could be forced to stop without the necessary components.

The Canadian government has also announced retaliatory tariffs on selected U.S. goods from September 8 in response to Trump’s 50% levies on about $20 billion worth of Canadian products.

Canadian Prime Minister Mark Carney described the situation as a trade war, saying Canada had been attacked through the U.S. tariffs.

The dispute has already affected the automotive sector, with several manufacturers either reducing or considering cuts to vehicle production in Canada. Canadian imports of U.S. vehicles have also fallen by 22%.

Some auto industry executives have expressed doubts about whether Trump’s latest tariff threat will actually take effect, pointing to previous occasions when similar threats were not implemented. They also warned that a 50% tariff could trigger a major response from Canada.

Industry officials suggested the announcement could be intended to put additional pressure on Ottawa and bring both sides back to the negotiating table.