(Bloomberg) – Canada is on the verge of car tariffs on President Donald Trump, with import duties as high as 25%, and the largest U.S. automaker will bear the brunt of the brunt.
Ford Motor Company, General Motors and Stellantis NV are the largest automakers in Canada’s sales, according to Jato Dynamics estimates. For all three companies, most of the products they sell in Canada are made in the United States.
Canada’s retaliatory tariffs were announced after the Trump administration imposed tariffs on foreign-made cars and trucks last week. Under new Canadian regulations, the number of tariffs on vehicles will depend on their components – Mexican parts are tax-free.
For example, if a car is assembled at a U.S. factory with 80% and 20% Mexican or Canadian parts, a 25% tax will apply to U.S. content, resulting in a total tariff rate of 20%.
If not manufactured and shipped, Canada’s tariff rate is 25% of the full amount of a U.S.-made car, the rule of the trade agreement signed during the term of Trump.
Prime Minister Mark Carney’s administration is trying to mitigate its impact on the Canadian economy by allowing automakers to apply for “missiles” which would ease some tariff costs if they continue to produce domestically. Strandis began short-term closures of an Ontario factory this week, citing uncertainty related to tariffs.
According to Brian Kingston, CEO of the Canadian Automobile Manufacturers Association, the cost of vehicles could increase by $4,700 to $12,000 in a few weeks, while manufacturers incorporate tariffs and navigate new systems to track components, while Brian Kingston, CEO of the Canadian Automobile Manufacturers Association, said GM, Ford and Stellantis representatives representing the country.
“Now, the problem with the industry is to reach a new level of spreading supply chains and to know the source of each part and components,” Kingston said in an interview, adding that U.S. tariffs are another challenge in Canadian auto production.
“This has done a damaging to the ongoing industry Americans have. It has made us all less competitive.”
For some, this shows a new era in the Canadian auto industry that once counts on its ability to trade with large-scale markets. Jato said the vast majority of Canadian car production has been shipped to the United States, and 44% of Canada’s new light vehicle sales in 2024 come from U.S. factories.
Including parts, the U.S. and Canada’s auto trade surplus is small.
“While Washington’s unscrupulous and real math maths appearing in cars have disappeared,” said Desrosiers Automotive Consultants Inc. Andrew King.
– Assistance with Craig Trudell.
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