Trump threatens additional 50 per cent tariff on Canadian auto industry

U.S. President Donald Trump has imposed an additional 50 per cent tariff on certain Canadian products, accusing Canada of discriminating against U.S. vehicle exports.

The tariffs took effect Aug. 19 under Section 338 of the U.S. Tariff Act of 1930, which allows the president to impose duties of up to 50 per cent in response to trade practices deemed discriminatory against U.S. commerce.

Trump later threatened on social media that the U.S. would impose a additional 50 per cent tariff on all cars, trucks, automotive parts and steel.

“Canada has been ripping off the United States of America for years. Their ridiculously high tariffs on our Farmers and farm products has made life impossible for these great American Patriots, and has long created a 60 Billion Dollar Deficit between our two Countries. Not sustainable, and NOT ANYMORE!” Trump posted on Truck Social Aug. 24. “On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%. Build in the U.S. and there are ZERO TARIFFS. Canada will be treated like a State no longer! On Trade, and in other ways, also, they are among the worst Nations in the World to deal with. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US! They do 95% of their business with the U.S., with us, the exact opposite!”

The White House said Canada’s tariff system for U.S. vehicles puts American manufacturers at a disadvantage compared with competitors from other countries.

Canada has maintained a 25 per cent tariff since April 2025 on U.S. vehicles that do not qualify for duty-free treatment under the Canada-U.S.-Mexico Agreement. For qualifying vehicles, Canada applies the tariff to the value of non-Canadian and non-Mexican content, subject to certain conditions.

According to the White House, U.S. vehicle exports to Canada fell approximately 22 per cent, from $25.9 billion to $20.3 billion, between April 2025 and March 2026 compared with the same period a year earlier.

Meanwhile, Canadian vehicle imports from countries other than the U.S. increased by approximately $2.85 billion, with Mexico accounting for almost $2 billion of the increase.

Trump said the additional duties are intended to offset what his administration considers discriminatory treatment and could encourage Canada to remove its tariffs on U.S. vehicles.

The new 50 per cent tariff applies only to Canadian products identified in an annex to the proclamation and is in addition to other applicable duties. However, products already subject to tariffs under Section 232 of the Trade Expansion Act, which covers sectors including automobiles, auto parts, steel and aluminum, are excluded from the new duties.