Carney Faces New Test as He Plots Response to US Auto Tariffs

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(Bloomberg) — Canadian Prime Minister Mark Carney said new US tariffs on cars and light trucks are a “direct attack” on workers in the auto sector as he prepared to return to Ottawa to plan the government’s response with members of his cabinet.

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President Donald Trump signed an order Wednesday putting 25% import taxes on autos, starting April 2, an expansion of a trade war designed to bring more manufacturing jobs to the US. 

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The tariffs are a violation of the US-Mexico-Canada Agreement that Trump signed during his first term, Carney told reporters during an election campaign stop in southern Ontario, the heart of Canada’s auto sector. 

“We will defend our workers. We’ll defend our companies. We’ll defend our country,” said Carney, who replaced Justin Trudeau as prime minister on March 14. It’s the first time Trump has laid out such specific plans for new tariffs against Canadian industry since Carney took over. 

Auto tariffs would represent a hammer blow to Canada’s manufacturing business. The country shipped nearly C$50 billion ($35 billion) worth of vehicles into the US market last year, making autos one of its most important exports. General Motors Co., Chrysler parent Stellantis NV, Toyota Motor Corp. and others all have assembly plants in Ontario.   

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One option is to put further counter-tariffs on US-manufactured products, Carney said. Canada has already imposed a 25% import taxes on about C$60 billion worth of US goods and has threatened to put tariffs on another C$95 billion if necessary. 

It was not immediately clear how broadly the executive order would impact Canadian auto parts. The order suggested the tariff would not apply to auto parts that comply with USMCA until a process could be established to apply the tariff exclusively to the non-US content of those parts.

Canada’s auto industry is focused on making parts and vehicles for the US market — though its auto assembly plants have declined in importance over the years. Canada exported 1.1 million cars and light trucks to the US last year, down from about 2 million a decade earlier. 

The US had a small automotive trade surplus with Canada in 2024. Canada imported C$82 billion worth of cars, trucks and auto parts last year from the US and exported almost C$79 billion, according to data from Statistics Canada.

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Ontario Premier Doug Ford said it was virtually guaranteed that Canada would retaliate. He urged Carney to “target American cars.” 

US-manufactured vehicles have a dominant share of the Canadian vehicle market. 

“I can assure you one thing. We’re going to make sure that we inflict as much pain as possible to the American people without inflicting pain on the Canadian population,” the premier said. 

John D’Agnolo, a union representative for Ford Motor Co.’s engine plant in Windsor, Ontario, said Trump’s focus on finished vehicles, rather than auto parts, might be a reprieve for plants like his. That factory ships its output to Ford’s US assembly plants.

“It’s still bad, to be sure. But for us — if we’re not being tariffed for engines that enter the States, to then get assembled there — we might be OK,” he said. “But I just don’t know. These announcements are incredibly vague and confusing.”

Canada is in the middle of a national election campaign that will conclude on April 28. Polls show a close race between Carney’s Liberal Party and the Conservative Party. 

—With assistance from Laura Dhillon Kane.

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