Canada adds 25% tariff on U.S.-made cars

As the U.S. trade war expands to involve more and more countries, Canada has placed 25 per cent automotive tariffs on U.S.-made automobiles.

The new tariff will only apply to cars that don’t fully comply with the Canada-United States-Mexico Agreement (CUSMA). That said, vehicle parts are exempt from the new tariff. Canadian Prime Minister Mark Carney hopes that Canada can make around $8 billion from counter-tariffs, and he said that he plans to funnel that money back into the Canadian domestic auto industry.

The CUSMA tariff rules mean that if a car is made with 50 per cent Canadian parts, the tariff will only apply to the 50 per cent that was made with U.S. or Mexican parts.

While this will ideally help the Canadian auto industry, it’s worth remembering that most of the automakers who operate in Canada are headquartered in the U.S., so it will be hard to determine where their allegiances lie if this trade war drags out for a lot longer. That said, Canada isn’t the only country that’s turning on the U.S. due to tariffs. Maybe the combined price increases from a plethora of countries due to counter-tariffs will cause the U.S. to back down in this trade war.

Due to the U.S. tariffs, Stellantis, the company behind Chrysler and Dodge, has halted production at its Ontario plant. Other workers at Ford and GM plants also fear shutdowns due to the tariffs, according to a BBC News report.

Ninety-three per cent of Canadian-made cars are shipped to the U.S., so there is a huge chance the tangled nature of vehicle production in North America will lead prices to rise in the U.S. and Canada. An estimate in the BBC News report suggests that even a 12 per cent tariff could bump up the price of a Chevy Silverado truck by as much as $11,000.

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Source: BBC News