Canada warns of layoffs and trade deal violations as US auto duties take effect April 2
US President Donald Trump signed an executive order on Wednesday to implement a 25 percent tariff on all automobile imports to the United States, effective April 2.
Trump said the US would begin collecting the tariffs the next day, describing the move as part of a broader trade agenda intended to bring manufacturing jobs back to the US.
“What we’re going to be doing is a 25 per cent tariff on all cars that are not made in the United States,” Trump said at the White House.
He called the measure “very modest” and added, “We’re going to charge countries for doing business in our country and taking our jobs, taking our wealth, taking a lot of things that they’ve been taking over the years.”
As reported by BNN Bloomberg, White House Staff Secretary Will Scharf stated the tariffs would apply on top of existing levies, and the administration expects the new duties will generate US$100bn in annual revenue.
Trump said the duties are permanent and will also apply to auto parts such as engines, transmissions, powertrain components, and electrical parts.
According to The Canadian Press, confusion remains over how the duties will apply to Canada, given the deep integration of the North American auto industry.
Prime Minister Mark Carney called the tariffs a “direct attack” on Canadian autoworkers and said they are “entirely inconsistent” with the Canada-United States-Mexico Agreement (USMCA) and the history of bilateral auto relations under the 1965 Auto Pact.
“We will defend our workers. We will defend our companies. We will defend our country. And we will defend it together,” Carney said during a speech in Kitchener, Ontario.
The White House said in a fact sheet that vehicles imported under USMCA would only be tariffed on the value of non-US content.
Those tariffs would not take effect until US Commerce Secretary Howard Lutnick, in consultation with US Customs and Border Protection, establishes a process to apply them.
However, The Canadian Press reported that there appeared to be no long-term carveouts for USMCA-compliant vehicles.
According to BNN Bloomberg, Trump confirmed additional “reciprocal” tariffs would be announced on April 2, with the US applying country-specific levies to counter barriers placed on American imports.
Trump has signalled that some trading partners may receive exemptions or duty reductions. He also said April 2 would be “the real Liberation Day of America.”
BNN Bloomberg also reported that Trump hosted executives from Hyundai Motor Co. this week at the White House and highlighted their US$21bn expansion plan as evidence that “tariffs very strongly work.”
Earlier in March, Trump imposed 25 percent tariffs on steel and aluminum imports, including from Canada, and temporarily delayed broader duties on goods under USMCA.
According to The Canadian Press, Conservative Leader Pierre Poilievre urged Trump to “knock it off,” calling the tariffs disruptive.
“These tariffs are simply causing chaos in markets. They are dislocating workers on both sides of the border,” he said during a campaign stop in Montmagny, Quebec.
NDP Leader Jagmeet Singh said the federal government should have recalled Parliament to pass emergency measures for affected workers.
As reported by The Canadian Press, Singh noted that Prime Minister Carney temporarily waived the one-week waiting period for employment insurance benefits last Friday.
Dave McDowell, president of Unifor Local 1859 and a worker at THK Rhythm Automotive in St. Catharines, Ontario, told The Canadian Press that the plant has already seen some slowdown.
He said many workers are anxious as the April 2 tariff implementation approaches.
“There’s just a lot of people worried, they have to put up with this for the next four years and there’s no way of knowing what he’s going to do,” he said.
Unifor national president Lana Payne stated Canadian autoworkers have played a central role in the economy for over a century. “These are not Donald Trump’s jobs to steal. They are not Donald Trump’s jobs to take. They are Canadian jobs,” she said.
Ontario Premier Doug Ford told The Canadian Press that earlier assurances from Lutnick in Washington about no further surprises were contradicted by Trump’s latest move.
“Well, here’s the surprise,” Ford said. He added that he has asked Carney to convene a premiers’ meeting to discuss possible retaliatory measures.
“We have two options here: we either roll over as a country and he runs us over 15 times and gets what he wants, or we feel a little bit of pain and we fight like we’ve never fought before,” he said.
BNN Bloomberg reported that shares of major automakers fell in after-hours trading following the announcement, with Stellantis down 2.8 percent. Tesla’s stock also declined.
Trump has also pushed for a tax deduction on car loans, urging House Speaker Mike Johnson to include it in a tax-cut package under negotiation.
“If you borrow money to buy a car, you’re allowed to deduct interest payments for purposes of income tax, but only if the car is made in America,” Trump said, according to BNN Bloomberg.
Analysts estimate the new tariffs could raise new vehicle prices by several thousand dollars.
One study found that tariffs on imports from Canada, Mexico, and China could add about $4,000 to the cost of a crossover vehicle and up to $12,000 for a US-made electric vehicle.
According to The Canadian Press, the automobile tariffs are the first since Canada’s federal election began four days ago. Trump’s actions on trade and his ongoing annexation rhetoric have become a central campaign issue for many Canadian voters ahead of the April 28 election.
The Canadian Press also noted that the White House has not clarified whether the broader tariffs previously linked to fentanyl concerns, which were partially paused, will be reinstated next week.
