President Donald Trump has issued a warning that the United States will hike tariffs on Canadian cars, trucks, and auto‑parts from the current 25 % to 50 % with effect on 1 January, marking a sharp turn in the trade relationship between the two neighbouring countries.
The pledge follows the collapse of last week’s trade talks, in which each side accused the other of making unreasonable last‑minute demands. Canadian officials say the United States imposed an unacceptable clause limiting Canada’s ability to sign trade deals, while US trade representative Jamieson Greer said Canada changed the terms in the last 24 hours before the deadline.
Toronto‑based Premier Doug Ford, whose province hosts Canada’s auto‑manufacturing heartland, responded to the tariff threat by telling President Trump to "kiss my ass" and hinting that Canada would push back by raising US costs for gas, electricity and minerals. Trump replied on Truth Social, calling Ford’s remarks "bluster" and warning that the consequences could be far worse.
Federal leader Mark Carney has argued Canada will retaliate in kind, promising to distribute a C$11 billion fund to build ice‑breakers that will open northern shipping routes, while also pledging to diversify trade away from an economy too heavily reliant on the United States.
Canadian businesses are bracing for the impact; entrepreneurs in Portland, such as Paloma Clothing, warn that tariffs could increase the cost of Canadian‑made pillows by up to 50 %. With the United States reportedly not renewing the USMCA in its current form, the trade standoff threatens the $1.6 trillion North American Trade complex, potentially sending Canada into recession and altering long‑term growth trajectories.
For more stories on the trade war, see ‘Half my business will be gone’ – firms in Canada and US fear trade war, How Canada could hit back to hurt the US economy – and Trump, and Trump says Canada wants benefits of being US state after trade talks collapse.
