US President Donald Trump has threatened to raise tariffs on all cars, trucks and automotive components entering the country from Canada to 50%.
In a post on Truth Social, Trump wrote: “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! On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%.”
According to a Reuters report, negotiations had been moving toward a deal that would have cut the top-line tariff on Canadian cars and light-duty trucks from 25% to 15%, alongside lowering aluminium and steel tariffs from 50% to 25%.
Talks broke down on Friday (21 August) over a dispute concerning whether US tariff relief would extend to medium- and heavy-duty trucks.
The threatened increase could disrupt a deeply integrated North American automotive supply chain, given the extent to which US vehicle production relies on Canadian-made parts and vehicles.
Trump said: “Build in the U.S. and there are ZERO TARIFFS. Canada will be treated like a State no longer!”
He added: “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!”
Canada remains among the top two US trading partners, with combined goods and services trade between the two countries totalling $872.3bn last year, a 4.6% decline.
Around three-quarters of Canada's exports go to the US, while the country draws close to half its imports from its southern neighbour, according to the Office of the US Trade Representative.
From 8 September, Canada intends to impose tariffs on selected US goods in response to the 50% levies Trump placed on $20bn worth of Canadian products.
According to the White House: “From April 2025 through March 2026, Canadian imports of US motor vehicles decreased by approximately 22%, or $5.6bn, compared to the same period in 2024-2025.”
US Treasury Secretary Scott Bessent said on Monday (24 August) that Trump wants Canada to return to negotiations in good faith.
Canadian Prime Minister Mark Carney, speaking in Quebec the same day, said a “mutually beneficial deal” remained possible, provided the US respects Canadian sovereignty.
“When the Americans go to the negotiating table first with the right attitude toward our industry and a true partnership, of course we'll come to the negotiating table”, Carney was quoted as saying.
Several automakers have reportedly signalled plans to reduce Canadian production amid the standoff.
Last month, Trump signed three proclamations introducing an additional 50% tariff on a range of Canadian goods.
