By Vipal Monga and Paul Vieira

Canada will match President Trump's auto tariffs with 25% tariffs of its own on U.S. vehicles that are not compliant with the U.S.-Mexico-Canada trade pact, Prime Minister Mark Carney said on Thursday.

He said the counter-tariff would apply only to finished vehicles and wouldn't affect vehicle content from Mexico. It wasn't immediately clear how many vehicles would be affected, but Carney said the tariff could raise up to 8 billion Canadian dollars, or the equivalent of $5.62 billion, which would be used to help workers and companies affected by the Trump tariffs.

Vehicles from Mexico would not be affected, and Carney said Ottawa has no plans to slap duties on auto parts given their importance in the integrated supply-chain network.

This new tariff on assembled vehicles is the latest piece of retaliation from Canada against the U.S. after President Trump imposed tariffs on some Canadian imports like steel, aluminum and goods that do not qualify for exemption under the U.S.-Mexico-Canada trade deal. Trump repeatedly warned Canada since late November that he would slap a 25% levy on all nonenergy imports into Canada--but ultimately that was not part of Trump's tariff plan, unveiled Wednesday, leading to some limited relief among officials.

To date, Canada has imposed 25% tariffs on over $40 billion of American-made goods entering Canada, and Carney said those duties would remain in place.

Trump's decision to slap 25% tariffs on all foreign-made vehicles had immediate ramifications for the Canadian economy, as Jeep parent Stellantis temporarily halted production at its auto assembly factory in Windsor, Ontario, affecting over 3,000 employees. "My government stands in solidarity with those workers in Windsor and all those workers hurt by President Trump's tariffs," Carney said at a press conference.

Targeting U.S.-made vehicles is in line with Carney's remarks this week that he intended to take a "deliberate" approach to countering Trump's new tariff policy. Under former Prime Minister Justin Trudeau, the government had said it was prepared to slap hefty tariffs on over $100 billion of U.S. imports.

Carney said his call last week with Trump likely played a role in Canada escaping additional tariffs outside what was previously announced prior to the Liberation Day announcement. Canada has "the best deal of a series of tough deals--bad deals in many respects--so that is progress," Carney said, arguing the relative reprieve is an acknowledgement from the Trump administration regarding the economic partnership between Washington and Ottawa.

Write to Paul Vieira at paul.vieira@wsj.com

(END) Dow Jones Newswires

April 03, 2025 13:02 ET (17:02 GMT)

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