They say the only guarantees in life are death and taxes. They should add tariff news to that list.
What happened: After announcing 25% tariffs on U.S. vehicle imports on Wednesday, President Donald Trump stoked the trade war flames to new highs, threatening Canada and the EU with even more punishing tariffs if they collaborate “to do economic harm” to the U.S.
- The feds have yet to announce its exact response strategy, but Prime Minister Mark Carney did say Canada will fight the tariffs “with retaliatory trade actions of our own.”
- Ontario Premier Doug Ford, whose province stands to lose the most from these new tariffs, wants to “inflict as much pain as possible to the American people” in return.
Catch-up: The collection of auto tariffs is slated to commence on April 3, compounding a blanket 25% tariff on Canadian imports and 10% tariff on Canadian energy that are set to take effect the day before — plus pre-existing 25% tariffs on Canadian steel and aluminum.
- There are some potential exceptions: If over half of the parts of a finished vehicle are made in the U.S., no tariffs will apply. Otherwise, cars would be taxed on the share of non-U.S. parts.
Why it matters: The automotive industry accounts for 21% of all traded manufactured goods, with 90% of them going to the U.S. With so many moving parts, the exact impact is still unclear, but suffice to say that it will be devastating and even *large gulp* recessionary.
Bottom line: Until now, there was still hope that Canada would be able to find a way out of this trade war but, as one Ontario representative put it to Global News, “the charm offensive [is] over.” It appears that Trump’s stance has hardened and tariffs are sticking around.—QH