Trump vows to double Canadian auto tariffs, escalating fight
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[WASHINGTON] US President Donald Trump pledged to double the automobile tariff on Canadian vehicles and parts starting next year, escalating the spiraling trade fight between the two economies.
Trump posted on Monday (Aug 24) that “Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel” would rise to 50 per cent, effective Jan 1. The current auto rate is 25 per cent but is applied only to non-US content. Imported steel already faces a 50 per cent charge.
The latest tariff threat comes after negotiations between the US and Canada broke down on Friday, which led to a 50 per cent levy on billions of dollars worth of Canadian goods to take effect. Canadian Prime Minister Mark Carney has announced a package of retaliatory duties.
Following through on the auto tariffs could significantly disrupt a supply chain between the US and Canada that has become deeply integrated over the past few decades. Trump has previously pledged to tariff auto parts but had not yet proceeded with the logistically complicated task.
It was not immediately clear how Trump would address the carve-out for US content in vehicles, which substantially affects the tariff rate. Levies on Canadian vehicles, in practice, are about half the headline rate because the vehicles are typically half US-made.
It is unclear if the new tariffs Trump announced Monday will be enacted. The Jan 1 implementation sets up runway for potential negotiations, even as the Canadians see little chance of those resuming before the midterms. Carney is set to respond to the weekend tariffs with levies of his own on Sept 8 and the US has threatened to escalate further if he does.
Monday’s threat was Trump’s most fulsome response yet since the sudden collapse of trade talks killed an emerging deal to head off the new levies and adjust existing ones. The two sides have blamed each other for the collapse of negotiations.
US Trade Representative Jamieson Greer said the deal offered Canada tariff reductions, including for steel, aluminum and autos, while Carney said he walked away because of 11th-hour US demands that were too great.
The new measures Trump announced on Monday target the Canadian province of Ontario in particular. The province is led by Premier Doug Ford, whose pugnacious approach to talks has riled the Trump administration. Steel and auto production is heavily concentrated in Ontario, which is Canada’s most populous and vote-rich province. BLOOMBERG
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