Canada Retaliates Against U.S. Auto Tariffs with New Levies and Broader Trade Measures

Canada has introduced countermeasures against U.S. auto tariffs, imposing a 25% tariff on vehicles imported from the United States that do not comply with the U.S.-Mexico-Canada trade agreement (USMCA). Prime Minister Mark Carney specified that these tariffs will not affect auto parts or vehicle content from Mexico. Revenue generated, estimated at C$8 billion before tariff relief, will be allocated to affected auto workers and related sectors. This action follows U.S. President Donald Trump's imposition of 25% tariffs on goods non-compliant with USMCA, along with tariffs on steel and aluminum imports. While the broader global tariffs spared Canada, the country has responded with a multi-faceted retaliation strategy. Initially, Canada imposed 25% tariffs on C$30 billion worth of U.S. goods, targeting a range of products including orange juice, peanut butter, wine, appliances, and apparel. This was part of a larger plan to target C$155 billion in U.S. imports, with the remaining C$125 billion facing delayed implementation. Furthermore, Canada imposed 25% tariffs on an additional C$29.8 billion worth of U.S. products in response to steel and aluminum tariffs. These tariffs, effective March 13, 2025, will remain until the U.S. eliminates its steel and aluminum tariffs on Canada. The affected items include candles, glues, kitchenware, and jewelry. Beyond tariffs, Canada is also considering non-tariff retaliatory measures, potentially involving critical minerals and energy procurement. Provinces have removed U.S. liquor from store shelves, and Ontario has banned U.S.-based companies from government procurement. Ontario also cancelled a C$100 million contract with Elon Musk's Starlink, and Canada has frozen rebate payments for Tesla and restricted the company from future EV rebate programs.