Canada didn’t waste much time letting the U.S. know what it thought of Liberation Day.
What happened: On the same day that the U.S.’s 25% tariffs on foreign-made vehicles came into effect, Ottawa announced its own 25% tariff on all U.S.-made vehicles that don’t comply with the Canada-U.S.-Mexico Agreement (CUSMA).
- PM Mark Carney said all the money that comes from the tariffs will be redistributed to auto producers if they keep investing and producing cars in Canada.
Catch-up: Canadian-made vehicles exported to the U.S. now face a tariff as high as 25% — although that levy isn’t applied to the value of American parts in a finished vehicle, meaning the final tariff will be lower for many of them.
- Most of the vehicles assembled in Ontario contain a large share of U.S.-made parts, but a reduced tariff could still devastate the sector.
- Automotive Parts Manufacturers’ Association head Flavio Volpe said the industry simply can’t absorb double-digit cost increases.
Zoom out: In the first post-tariff domino to fall in the sector, Stellantis announced that it would lay off 900 U.S. workers, pause Mexican production, and shut down its plant in Windsor for at least two weeks — a move that will affect ~3,200 Canadian workers.
Why it matters: The tit-for-tat tariffs put the deeply interconnected North American auto industry in limbo. The higher costs will likely lead to more plant shutdowns and layoffs. For Canadian consumers, it could mean paying as much as $5,000 more for a car.—LA