(Bloomberg) — Canada is hitting back against President Donald Trump’s auto tariffs with import taxes of as much as 25% on vehicles assembled in the US — and the biggest American automakers will bear the brunt.
Ford Motor Co., General Motors Co. and Stellantis NV are the large automakers with the biggest share of Canadian sales that rely on imports from the US, according to estimates from Jato Dynamics. For all three companies, a majority of the products they sell in Canada are manufactured in the US, the firm said.
Canada’s retaliatory tariffs were announced after the Trump administration went ahead with tariffs on foreign-made cars and trucks last week. Under Canada’s new rules, the amount of tariffs on a vehicle will depend on its components — Mexican parts are exempt.
For example, if a car is assembled at a US factory with 80% US content and 20% Mexican or Canadian components, the 25% levy will apply to the US content — resulting in total tariff rate of 20%.
Canada’s tariff rate is a full 25% on US-manufactured cars if they’re not made and shipped under the rules of the US-Mexico-Canada Agreement, the trade accord that Trump signed during his first term in office.
Prime Minister Mark Carney’s government is trying to lessen the impact on the Canadian economy by allowing automakers to apply for “remission” that would give relief on some tariff costs if they continue their domestic production. Stellantis this week began a short-term shutdown of an Ontario plant, citing the uncertainty related to tariffs.
Still, the cost of vehicles is likely go up by $4,700 to $12,000 within weeks while manufacturers incorporate the tariffs and navigate new systems for tracking components, according to Brian Kingston, chief executive officer of the Canadian Vehicle Manufacturers’ Association, which represents GM, Ford and Stellantis in the country.
“What is now being asked of the industry is to go to a new level of detangling the supply chain and understanding specifically where every part and component has come from,” Kingston said in an interview, adding that US tariffs are another challenge for Canadian car production.
“It’s a detriment to the industry that the Americans are proceeding with this. It makes us all less competitive.”
For some, this points to a new era in the Canadian auto sector that once counted on its ability to trade with the massive market to its south. The vast majority of Canada’s automotive output is shipped to the US, while 44% of new light vehicle sales in Canada in 2024 came from US factories, according to Jato.
Including parts, the US has a small automotive trade surplus with Canada.
“Despite the unhinged rhetoric and really bad math coming out of Washington, the days of Canada being a net exporter in automotive are long gone,” said Andrew King, managing partner at DesRosiers Automotive Consultants Inc. “The structural risks of having 95% of our exports heading to one country have become clearly evident in the events of recent weeks.”
–With assistance from Craig Trudell.
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