He claims it’s because Canada “stole” the U.S. vehicle industry when “our people were asleep at the wheel”
- U.S. President Donald Trump is threatening a 100% tariff on Canadian-made vehicles
- It’s because Canada “stole” the car industry from the U.S., he said
- That would be on top of 25% steel and aluminum tariffs that Ford’s CEO says will “blow a hole in the U.S. industry that we have never seen”
After first pausing his tariff threat against Canada on February 4, supposedly for a month, but then breaking that promise with a 25% tariff on aluminum and steel just a week later, U.S. president Donald Trump is now threatening to hit Canadian-assembled vehicles with a tariff of 50% to 100% of their value. Speaking with Fox News, Trump said that, “If you look at Canada, Canada has a very big car industry. They stole it from us. They stole it because our people were asleep at the wheel.”
Following up on that, he said that “if we don’t make a deal with Canada,” he will put a “big tariff on cars” of 50% to 100% “because we don’t want their cars. We want to make the cars in Detroit.”
Virtually no vehicles are made entirely in-house anymore, and Canada also has a thriving parts-supply industry that, in 2023, added $10 billion to the GDP and employed 80,450 people. More than 43% of Canadian-made parts by value stay in Canadian manufacturing, with most of the remaining sent to U.S. auto plants. It’s estimated that vehicle parts and components can cross the border up to eight times between Canada, the U.S., and Mexico as they are built up and then installed in vehicles.
NAFTA was replaced with the Canada-United States-Mexico Agreement (CUSMA) in 2018, which Trump initially proposed and then signed during his last presidency (south of the border, it’s known as USMCA, naturally, for United States-Mexico-Canada). That new deal was basically just an update of NAFTA, although it did require 75% of a vehicle’s parts to be made in one of the three countries, up from the previous 62.5%, in order for the vehicle to move tariff-free across the borders. It also required parts to be made by workers earning a minimum of US$16 an hour; and labour rules and environmental protections were added.
(A 25% levy on steel) across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen
—Jim Farley, CEO, Ford Motor Company
Regarding the steel and aluminum tariffs, Jim Farley, CEO of Ford in the U.S., said at a conference that a 25% levy “across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen,” and that it would give “free rein to South Korean and Japanese and European companies” bringing 1.5 to 2 million vehicles into the U.S. “that wouldn’t be subject to those Mexican and Canadian tariffs.”
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