Canadian Prime Minister Mark Carney said Thursday that if US President Donald Trump imposes further auto tariffs, which have escalated a global trade war and devastated equities, he will counter with unspecified trade moves.
Carney said he had not yet decided what steps Canada will take if Trump goes ahead with his plan to put new 25% levies on imported vehicles and light trucks.
He stated that he would respond next week, when the car tariffs and a second set of reciprocal duties on US trading partners are expected to take effect.
“We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Carney said at a news conference.
European countries have threatened retaliation as well.
The tariffs could add thousands of dollars to the cost of an average vehicle in the United States, contradicting Trump’s campaign promise to lower consumer prices. Ferrari announced price hikes of up to 10% for cars sold in the U.S., and other automakers also warned they might raise prices as well. Dealers raised fears of job losses.
The S&P 500 ended lower on Thursday, with auto stocks falling.
Tesla edged up 0.4%, with investors betting the electric vehicle maker will be hurt less by tariffs because of its largely domestic production.
The tariffs are a sucker punch for some of the United States’ most important allies and would come atop other trade penalties Trump has already put in place. Mexico, Japan, South Korea, Canada and Germany are the biggest suppliers of automotive imports to the United States that were worth $474 billion in 2024.
Carney said Canada would transform its economy to become less dependent on its southern neighbour, which has long been a close ally and important trading partner.
That may be challenging. Vehicles are Canada’s second-largest export (after oil), worth $51 billion in 2023, with 93% exported to the United States.
With billions of euros wiped from German car shares on Thursday, leaders in Europe’s largest economy demanded a stern response.
“The United States has chosen a path that will result in only losers, because tariffs and isolation harm prosperity for all,” German Chancellor Olaf Scholz stated.
In neighbouring France, which is hosting a Ukraine conference without the US on Thursday, Finance Minister Eric Lombard termed Trump’s plan “very bad news,” saying the only option was for the EU to hike its own duties.
Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining U.S. industrial base.
Many trade experts, however, expect prices to initially rise and demand to fall, hurting a global auto industry that is already reeling from uncertainty caused by Trump’s rapid-fire tariff threats and occasional reversals.
Trump said he might hit the EU and Canada with larger tariffs if they teamed up to retaliate.
