As Canada prepares for U.S. tariffs on steel and aluminum, President Donald Trump has escalated tensions by suggesting a massive new tariff on Canadian-made vehicles—ranging from 50% to 100%. In an interview with Fox News, Trump accused Canada of “stealing” the American auto industry and warned that if a trade deal isn’t reached, his administration would impose harsh penalties on Canadian car imports.
“If you look at Canada, they have a very big car industry. They stole it from us because our people were asleep at the wheel,” Trump claimed. “If we don’t make a deal with Canada, we’re going to put a big tariff on cars—could be 50% or 100%—because we don’t want their cars. We want to make the cars in Detroit.”
The automotive sector between Canada and the U.S. has been closely integrated since the 1960s, beginning with the Auto Pact, followed by NAFTA, and later the Canada-United States-Mexico Agreement (CUSMA). Industry experts warn that Trump’s proposed tariffs could cripple North American auto production, leading to shutdowns, job losses, and soaring car prices for American consumers.
Flavio Volpe, president of the Automotive Parts Manufacturers Association, stated that even a 25% tariff would paralyze the industry within a week, while a 50% or 100% tariff would bring it to a complete halt. “Hundreds of suppliers and dozens of automakers have made it clear—they won’t pay Trump’s surtax. The industry would shut down immediately,” he said.
The deeply intertwined supply chain means parts cross the border multiple times before final assembly. A disruption would be catastrophic, explained Tu Nguyen, an economist at RSM Canada. “A tariff on Canadian-made cars would be akin to cutting off one’s nose to spite one’s face,” she said. She noted that replacing Canadian production in the U.S. would require five or six new assembly plants, costing around $50 billion and taking a decade to build—an unrealistic scenario.
The economic fallout could be severe. Brian Kingston, president of the Canadian Vehicle Manufacturers Association, warned that tariffs could increase vehicle prices for American consumers by at least $6,500 per car, while also giving European and Asian automakers a competitive edge. Canada is the largest export market for U.S. vehicles, with American auto exports to Canada exceeding those to China, Germany, and Mexico combined.
Despite Trump’s claims that Canada “stole” the industry, experts argue otherwise. “The Canadian auto sector was built alongside the U.S., starting with Ford in 1904 and General Motors in 1908 in Oshawa,” Volpe said. He emphasized that the sector has always been a collaborative effort, benefiting Detroit as much as Canada.
With trade negotiations looming and CUSMA up for re-negotiation in 2026, Canada is working to dissuade Trump from imposing tariffs that could severely disrupt the North American automotive landscape. Finance Minister Dominic LeBlanc is set to meet with U.S. Commerce Secretary nominee Howard Lutnick to address concerns. However, with Trump doubling down on protectionist policies, the threat of an all-out trade war in the auto sector remains high.
