Canada Strikes Back As US Tariffs on Foreign Autos Take Effect, Imposes 25% Duties on US Vehicles and Parts
Canada will impose its own 25% tariffs on certain US vehicles and auto parts in response to a 25% duty on foreign automobiles that came into effect on 3 April 2025 (see United States to Impose 25% Tariff on Imported Automobiles and Parts, Citing National Security Concerns (27 March 2025)).
The 25% Canadian tariffs, announced by Prime Minister Mark Carney on the same day that the US measures took effect, will apply to:
- fully assembled vehicles imported from the United States that do not meet content requirements under the Canada–United States–Mexico Agreement (CUSMA); and
- non-Canadian and non-Mexican content in CUSMA-compliant fully assembled vehicles imported into Canada from the United States.
Canada will take "every possible step to protect Canadian workers and businesses from the unjust tariffs imposed by the United States", Prime Minister Carney said.
The federal government also announced plans to develop a new incentive framework aimed at boosting domestic automotive investment and production. In addition, Canada said it will direct all revenue generated from these new tariffs toward programs supporting Canadian auto workers.
Canada's announcement came one day after US President Donald Trump's 2 April proclamation of "Liberation Day", in which he unveiled a sweeping set of new tariffs on global imports (see Trump Administration Rolls Out Sweeping 10% General Tariff on All Imports, Reciprocal Elevated Duties Targeting EU, 53 Other Countries (3 April 2025)). While signalling a broad shift in US trade policy, the Trump Administration did not introduce new measures directly targeting Canada. Instead, Canada's response was triggered by the earlier US decision to impose a 25% tariff on foreign automobiles, including those from Canada.
Carney's announcement underscores growing tension within one of the world's most integrated trade partnerships. According to Canada, each day, about USD 2.5 billion worth of goods and services cross the Canada–United States border, supporting millions of jobs on both sides.
The latest measures build on broader counter-tariffs introduced in March 2025, which included:
- 25% tariffs on CAD 30 billion worth of US goods (see Canada Announces Resumption of Retaliatory Tariffs in Response to US Action (4 March 2025) and President Trump's 25% Tariffs on Canada, Mexico Take Effect but De Minimis Exception Will Continue (4 March 2025)); and
- additional tariffs on steel and aluminium products valued at CAD 15.6 billion, along with other US imports worth CAD 14.2 billion — matching US tariffs dollar-for-dollar (see Canada Retaliates Against US Tariffs with New Steel and Aluminium Duties (17 March 2025)).
Prime Minister Carney issued a news release announcing the new tariffs on 3 April 2025.
Report from Jannica Santos, Attorney