Canada will respond to Trump auto tariffs with its own trade actions, Carney says
Canadian Prime Minister Mark Carney said on Thursday that he would respond with unspecified trade actions if U.S. President Donald Trump imposes new auto tariffs.
Carney said he had not yet determined what actions Canada might take if Trump follows through with his plan to impose new 25 per cent levies on imported cars and light trucks. He said he would respond next week, when the auto tariffs and a separate set of reciprocal tariffs on U.S. trading partners are due to take effect.
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Why it matters: Canadian farmers have been rocked by uncertainty and falling prices as trade tensions with the U.S. continue to evolve
“We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Carney told a news conference.
Carney said Canada would transform its economy to become less dependent on its southern neighbor, which has long been a close ally and important trading partner.
“We will need to reduce our reliance on the United States,” he said at the press conference.
Vehicle prices to go up
European countries have threatened retaliation as well.
The tariffs could add thousands of dollars to the cost of an average vehicle in the United States, contradicting Trump’s campaign promise to lower consumer prices. Ferrari announced price hikes of up to 10 per cent for cars sold in the United States, and other automakers also warned they might raise prices as well. Dealers raised fears of job losses.
JP Morgan said the tariffs would raise new car prices by $4,000 to $5,300.
“None of this leads to more jobs or better wages. It leads to sluggish sales, costlier credit, and potential layoffs – exactly what a fragile economy doesn’t need,” said Nigel Green, CEO of global financial advisory deVere Group.
The tariffs are a sucker punch for some of the United States’ most important allies and would come atop other trade penalties Trump has already put in place. Mexico, Japan, South Korea, Canada and Germany are the biggest suppliers of automotive imports to the United States that were worth $474 billion in 2024.
With billions of euros wiped from German auto shares on Thursday, officials in Europe’s biggest economy called for a tough response.
“The U.S. has chosen a path at whose end lie only losers, since tariffs and isolation hurt prosperity for everyone,” German Chancellor Olaf Scholz said.
Trump threatens further escalation
Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base.
Many trade experts, however, expect prices to initially rise and demand to fall, hurting a global auto industry that is already reeling from uncertainty caused by Trump’s rapid-fire tariff threats and occasional reversals.
Trump said he might hit the EU and Canada with larger tariffs if they teamed up to retaliate.
“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had,” he said in a post on Truth Social.
Source: Farmtario.com