Trump Threatens 50% Tariff on Automobiles and Parts From Canada

President Trump said Monday the U.S. will impose 50% tariffs on automobiles and parts from Canada starting in January, the latest escalation in a tit-for-tat trade conflict that erupted over the weekend.

“On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%,” Trump said on Truth Social. U.S. tariffs on Canadian automobiles now stand at 25%, with discounts for the U.S. content in cars, while steel tariffs are at 50%.

The threat came after Canadian Prime Minister Mark Carney said his government would respond to a separate set of Trump’s tariffs with levies on U.S. products. Trump imposed those new tariffs—effective on about 5% of Canadian exports to the U.S.—early on Saturday, after last-minute talks deteriorated.

Trump’s latest move heightens the risk the U.S. and Canada could descend into all-out economic conflict. After talks collapsed, Carney said that his country would respond to Trump’s actions, and that he would rather have no economic deal with the U.S. than one he thought was bad for Canadian businesses or gave away its sovereignty.

Carney’s office didn’t immediately respond to a request for comment.

The new levies also cast further doubt over the future of the U.S.-Mexico-Canada Agreement, the trilateral deal that replaced Nafta. The deal is under annual renegotiation after the U.S. declined to renew it as-is this summer, and additional tariffs make it less likely that the U.S. and Canada will open formal talks on the deal.

Whether the higher automotive tariffs can be averted is unclear. After talks unraveled, U.S. officials said they had no plans to meet with their Canadian counterparts, and would instead proceed with implementing the previously announced tariffs on a long list of goods ranging from wine and cement to hockey sticks.

Trump’s new threat, however, gives the nations over four months to come back to the table before the higher levies would take effect next year.

If the tariffs are implemented, a 50% levy could drive automakers to close factories in Canada, particularly if the U.S. eliminates tariff rebate programs based on automakers’ use of U.S.-made parts. Auto parts regularly cross the U.S., Mexico and Canada borders multiple times before being put in a vehicle. Commerce Secretary Howard Lutnick, whose agency administers the tariffs, has said he wants to bring many of those supply chains to the U.S.