In brief
In a sudden escalation, Trump announced a 50% tariff on Canadian cars and parts, cracking a 1 January deadline. Canada’s government said it would retaliate, protecting its industry while announcing C$11 bn for new icebreakers. Mark Carney called for clear U.S. terms, while Ontario Premier Doug Ford delivered a snappy retort. Exporters warn of price spikes and the U.S.M.C.A. faces a rift, threatening North American trade stability.
US President Donald Trump announced Monday that he will increase tariffs on Canadian cars, trucks and parts from 25% to 50% effective 1 January.
The announcement came after trade talks collapsed late last week, with both sides accusing each other of last‑minute demands. Canada has declared it will respond with reciprocal tariffs and a new trade strategy aimed at protecting its automotive sector.
Prime Minister Mark Carney described the move as “unfair” and warned that Canada would counter with “dollar‑for‑dollar” measures. He also announced a C$11 bn ($7.95 bn) investment in six new icebreakers for the Canadian Coast Guard, a sign of a broader diversification plan.
Ontario Premier Doug Ford, whose province hosts a large share of Canada’s auto plants, shot back at Trump with a “kiss my ass” remark and hinted that Canada could burden the U.S. with higher energy costs.
Business owners across both countries are already feeling the pressure. In Portland, Oregon, Paloma Clothing’s owners said the price of a Canadian‑made pillow could rise by 50% to $90, while Canadian exporters warn that sudden tariff hikes could hurt supply chains and competitiveness.
The escalation also threatens the United States–Mexico–Canada Agreement (USMCA). Analysts warn that a breakdown of the pact could push Canada into recession and leave it on a permanently lower growth path.
Additional reporting by Ana Faguy.
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