President Trump threatened to double tariffs on Canadian autos, trucks, parts and steel to 50 percent starting Jan. 1, 2027, escalating the trade war after talks collapsed.
President Trump on Monday escalated the U.S.-Canada trade fight, threatening to raise tariffs on Canadian automobiles, trucks, auto parts and steel to 50 percent starting Jan. 1, 2027. The move came just days after Canadian Prime Minister Mark Carney vowed to retaliate "dollar for dollar" against American tariffs, and after last-ditch negotiations collapsed late Friday night.
Writing on Truth Social, Trump accused Canada of ripping off the United States for years, calling the northern neighbor among "the worst Nations in the World to deal with" on trade. Canada is the third-largest source of U.S. imports, with more than $380 billion in goods crossing the border in 2025. The president cast the escalation as a stand for American workers and fair trade after decades of one-sided deals.
Canadian negotiators walked away from trade talks late Friday, moments before a U.S.-imposed deadline that would add a 50 percent levy on nearly $20 billion (C$28 billion) of Canadian imports. Ottawa said Washington introduced last-minute demands, including a clause restricting which countries Canada could sign trade deals with. U.S. Trade Representative Jamieson Greer countered that it was Canada that kept moving the goalposts, telling CNBC the Canadians "wanted more."
The 50 percent duties took effect at 12:01 a.m. ET Saturday, hitting everything from hockey sticks to building materials. Carney responded by pulling his negotiators and promising to match Washington's tariffs "dollar for dollar," with retaliatory measures expected next month. "You're at war when you get attacked," Carney said Saturday. "We got attacked."
Trump's Monday post threatened to raise tariffs on imported cars, trucks, automobile parts and steel to 50 percent effective Jan. 1, 2027. Canadian-made vehicles that do not meet the United States-Mexico-Canada Agreement (USMCA) requirements currently face a 25 percent tariff, and Canadian steel already carries a 50 percent duty. It was unclear whether the announcement would push steel tariffs higher or whether USMCA-compliant vehicles would remain exempt.
The auto sector is deeply integrated across North America, with vehicles and parts crossing the border multiple times before assembly. Economists warn the tariffs could hit consumers and automakers hardest, while the broader fight threatens the future of the USMCA trade pact that underpins $1.6 trillion in North American trade.
Carney called the latest threat unsurprising and accused Trump of wanting to destroy Canada's auto industry. He said Canada is ready to resume talks but only if Washington comes with "the right attitude" -- and not one that treats Canada "as a subsidiary of the United States."
Ontario Premier Doug Ford, whose province anchors Canada's auto manufacturing, fired back hard, telling Trump he had "declared war, economic war against his closest friend and ally." Ford said everything is on the table, including cutting electricity exports and restricting critical minerals. "You won't get a grain of sand out of Ontario," he said. Trump responded on social media, writing that someone should get "these clowns" to "fall in line" or the consequences for Canada "will be far WORSE!"
The stakes are enormous. Canada supplies roughly 60 percent of U.S. crude oil imports and nearly all of the natural gas the United States exports. Analysts at Oxford Economics warned that if the escalation leads to the USMCA unraveling, Canada could be plunged into a recession and left on a permanently lower growth path.
Carney has also signaled Canada is preparing for a long fight, with retaliation plans that could extend beyond the midterms, and announced C$11 billion (about $8 billion) to build six new icebreakers for the Canadian Coast Guard at a Quebec shipyard -- part of an effort to diversify Canada's trade beyond the United States.
Both sides say talks are suspended with no date set to resume. Canada's dollar-for-dollar counter-tariffs are expected next month, and Trump's 50 percent auto threat would take effect at the start of the new year. With each side publicly digging in, businesses on both sides of the border are bracing for a prolonged economic showdown.
President Trump threatened to double tariffs on Canadian autos, trucks, parts and steel to 50 percent starting Jan. 1, 2027, escalating the trade war after talks collapsed.
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