The US will increase tariffs on imports of certain goods, including cars and trucks, from Canada to 50% starting next year, US President Donald Trump said Monday, after trade talks between the two countries collapsed late last week.
"Canada has been ripping off the (US) for years," Trump said in a social media post Monday. "Their ridiculously high tariffs on our farmers and farm products has made life impossible for these great American patriots, and has long created a ($60 billion) deficit between our two countries."
The US will raise tariffs on all cars, trucks, automotive parts, and steel imported from Canada to 50%, effective Jan. 1, 2027, Trump said. "Build in the US and there are zero tariffs."
Trump imposed 50% tariffs on about $20 billion worth of Canadian goods Saturday after US-Canada trade negotiations collapsed late Friday, news outlets reported. Canadian negotiators had reportedly sought to lower existing auto tariffs as part of a new trade deal with the US.
The US planned to impose a 50% tariff on certain Canadian goods, Canadian Prime Minister Mark Carney said in a statement Friday.
"Canada will match those tariffs dollar for dollar to protect our workers and businesses," Carney said. "Last-minute changes in the US proposed terms were unfair, uneconomic, and called into question the reliability of any deal."
Trump's new tariff threat would double top-line duties on Canadian auto imports, while tariffs on steel imports from Canada are already at 50%, according to news reports.
"The retaliation threat (by Canada) provides another deadline for an agreement to be reached by (Sept. 8), potentially providing an opportunity to de-escalate the situation and reach an agreement that paves the way for (US-Mexico-Canada agreement/Canada-US-Mexico agreement) renegotiation," Macquarie said in a note to clients e-mailed Monday.
"The risk would be that any follow through on the threat prompts a subsequent escalation from the US, potentially through additional section 338 tariffs," the brokerage wrote.
Earlier this month, US government data showed that Washington had a roughly $7.23 billion deficit in goods trade with Canada in June, up from $6.45 billion the month prior.
Earlier this year, the US Supreme Court ruled that the Trump administration lacked authority under the International Emergency Economic Powers Act to impose certain tariffs, paving the way for refunds to companies that had paid the duties.
