Canada retaliates with 25% tariff on US cars under CUSMA rules

In response to U.S. tariffs on cars imported into the USA, Canada will impose tariffs on American cars, but not on parts, because Canada recognizes the benefits of an "integrated production system." However, tariffs will be imposed on American car parts not originating from Canada if these parts do not meet CUSMA requirements.

Carney explained during a press conference that tariffs will not be imposed on cars imported into Canada from Mexico.

He added that the government is preparing a plan to support car manufacturers in Canada, with the condition being the maintenance of production. Carney said that all funds from Canadian tariffs will be directed towards assisting companies and workers in the automotive sector. The government estimates that this will amount to 6 billion US dollars annually.

Governments around the world reacted to President Donald Trump's decision announced Wednesday evening Eastern Time. German Economy Minister Robert Habeck warned that the "American tariff mania" could cause tremendous damage worldwide, while for consumers in the USA "this day will not be a day of liberation, but a day of inflation." He pointed out that if the USA does not want a negotiated solution, the EU will provide a "balanced, clear, and decisive response."

Automotive companies are also reacting. Stellantis announced on Thursday that it will temporarily lay off 900 workers at its plants in the USA. It will also suspend operations for two weeks at its plants in Canada and Mexico. Meanwhile, Volkswagen sent a note to U.S. dealers informing them about the fees as well as actions aimed at temporarily halting the delivery of additional vehicles from Mexico and stopping cars being shipped from Europe at the port,