Donald Trump has announced a new 50% tariff on Canadian automobiles, trucks, auto parts and steel, set to take effect 1 January 2027. It marks the latest blow to a trade relationship between the two countries that was once considered rock solid.
Writing on Truth Social, Trump accused Canada of "ripping off" the US "for years" and dismissed the country's tariffs on American farmers. "They feel entitled, and yet, WE DON'T NEED CANADA, THEY NEED US," he wrote, adding that Canada does 95% of its trade with the US.
Canadian prime minister Mark Carney said the move was no surprise. Speaking to reporters in Quebec, he called it "some form of reprisal" to Canada's response to earlier US tariffs. He pointed out that Canada is the largest buyer of American-made automobiles, ahead of the EU, Japan, Korea and the UK combined, and asked what the new tariff means for autoworkers in Michigan, Ohio, Kentucky and Alabama who depend on that demand. He said Canada would return to the table only "when the Americans go to the negotiating table first with the right attitude."
The announcement follows the collapse over the weekend of a proposed deal to ease tariffs on autos and other goods. Trump had already imposed a separate 50% tariff on $20bn of Canadian exports, including hockey equipment and electronics. Carney rejected the latest offer on Saturday, saying the US "asked too much and they offered too little," and has pledged to match American tariffs "dollar for dollar."
The two countries trade roughly $909bn a year, according to the US trade representative's office. Carney said last year that Trump's second term had effectively ended the era of "deep ties" between the neighbors.
For small and medium-sized businesses on both sides of the border, this is a supply chain problem as much as a political one. US auto parts suppliers, dealerships and steel-dependent manufacturers should expect higher input costs and pricing uncertainty well before the tariff even lands in 2027, and Canadian exporters serving American buyers face the same squeeze in reverse. Firms with cross-border contracts or inventory tied to autos and steel would do well to start pricing in the new rate now, and to watch for retaliatory tariffs that could hit unrelated goods, as Canada has already shown it's willing to do.