Canadian Prime Minister Mark Carney stated that he would take unspecified trade actions in response to US President Donald Trump’s announcement of new auto tariffs, which have intensified a global trade war and negatively impacted stock markets.
Last night, Mr. Trump announced a 25% tariff on imported vehicles, further escalating the global trade conflict and drawing criticism as well as threats of retaliation from US allies.
Mr. Carney indicated that he has not yet decided on the specific actions Canada might take should the US president proceed with his proposal.
The Canadian leader mentioned he would provide a response next week, coinciding with the scheduled implementation of the auto tariffs and a separate set of reciprocal tariffs on US trading partners.
European countries have also issued threats of retaliation.
The tariffs could potentially increase the cost of an average vehicle in the United States by thousands of dollars, contradicting Mr. Trump’s campaign promise to reduce consumer prices.
Ferrari announced it would raise prices by up to 10% for cars sold in the US, and other automakers are also cautioning that they may have to increase prices.
Dealers are expressing concerns about potential job losses. These tariffs represent a significant blow to some of the United States’ most vital allies and would be implemented atop other trade penalties that Mr. Trump has already imposed.
Mexico, Japan, South Korea, Canada, and Germany are the largest suppliers of automotive imports to the United States, which were valued at $474 billion (€439 billion) in 2024.
Mr. Carney remarked that Canada would undergo economic transformations to lessen its dependence on its southern neighbor, a longstanding ally and crucial trading partner.
“We will need to reduce our reliance on the United States,” he declared at a press conference.
Following substantial losses in German auto shares, officials in Europe’s largest economy are calling for a robust response.
“The US has chosen a path that leads only to losers, as tariffs and isolation undermine prosperity for everyone,” stated German Chancellor Olaf Scholz.
In neighboring France, which is hosting a Ukraine summit without the US, Finance Minister Eric Lombard labeled Mr. Trump’s plan as “very bad news,” asserting that the only recourse is for the EU to raise its own tariffs.
Britain, grappling with economic expansion challenges, is racing to secure an exemption while also threatening to reassess subsidies for electric vehicle maker Tesla, which is led by one of Mr. Trump’s chief advisers, Elon Musk.
Canada has frozen rebate payments to the electric car manufacturer.
Faced with declining sales, increasing competition, and political backlash, Tesla is somewhat insulated from Mr. Trump’s tariffs compared to its competitors; however, the Tesla CEO noted on X that the impact remains “significant.”
Donald Trump last night announced a 25% tariff on imported vehicles.
Tesla shares surged, as did those of US EV makers Rivian Automotive and Lucid Group, whose supply chains are largely based in the US. In contrast, shares of most other auto manufacturers fell sharply.
JP Morgan forecasts that the tariffs could inflate new car prices by $4,000 to $5,300.
Trump threatens further escalation.
Sources indicate that the Trump administration has also halted contributions to the World Trade Organization, further weakening the global trade body as it withdraws support for international institutions perceived as being at odds with its “America First” agenda.
China’s foreign ministry stated that the US approach undermines the multilateral trade framework and is “not conducive to solving its own issues.”
As shares continue to decline, Japanese Prime Minister Shigeru Ishiba remarked that Tokyo would consider “all options,” while South Korea announced it would implement an emergency response by April.
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Since taking office on January 20, Mr. Trump has both announced and delayed tariffs on Canada and Mexico, citing their involvement in allowing the opioid fentanyl to enter the US; imposed import taxes on Chinese goods for the same reason; introduced substantial duties on steel and aluminum imports; and consistently indicated plans to announce global reciprocal tariffs on April 2.
Mr. Trump views tariffs as a means to generate revenue to offset his promised tax cuts and to revive the long-declining US industrial sector.
However, many trade specialists anticipate that prices will initially rise and demand will drop, adversely affecting a global automotive industry already struggling with the uncertainty stemming from Mr. Trump’s swift tariff threats and intermittent reversals.
The US president warned that he may impose larger tariffs on the EU and Canada if they collaborate on retaliatory measures.
“If the European Union joins forces with Canada to harm the US economically, large-scale tariffs, much bigger than those currently planned, will be imposed on both to protect the best friend that each of those two countries has ever had,” he stated in a post on Truth Social.
TikTok deal.
Mr. Trump mentioned he would consider lowering tariffs on China to facilitate a sale agreement with TikTok’s Chinese parent company, ByteDance, for the short-form video app used by 170 million Americans.
ByteDance faces a deadline of April 5 to identify a non-Chinese buyer for TikTok or confront a US ban on national security grounds, which was set to take effect in January under a 2024 law.
This law emerged from concerns in the US that TikTok’s ownership by ByteDance renders it subject to the Chinese government, which could potentially employ the app for influence operations against the US or gather data on Americans.
Mr. Trump expressed willingness to extend the April deadline if an agreement regarding the social media app is not reached.
He acknowledged the critical role China would play in securing any agreement, including the necessity of its approval, stating, “maybe I’ll give them a little reduction in tariffs or something to get it done,” Mr. Trump told reporters.
This comment implies that selling TikTok is a priority for his administration and is significant enough to leverage tariffs as a bargaining tool with Beijing.
In February and earlier this month, Mr. Trump imposed additional levies totaling 20% on all imports from China.
Negotiating with China for an agreement that would relinquish control of a business valued at tens of billions of dollars has always posed the most significant challenge in finalizing any arrangement. Mr. Trump has previously used tariffs as leverage in the TikTok discussions.
