Trump threatens to double U.S. auto tariffs on Canada as trade talks stall

U.S. President Donald Trump said on Monday that tariffs on Canadian cars, trucks and auto parts will rise from 25% to 50% starting 1 January, intensifying the ongoing trade dispute between the two neighbours. The announcement follows the breakdown of trade talks late last week, with each side accusing the other of making unacceptable last-minute demands. Canadian Prime Minister Mark Carney described the threat as unsurprising and said Canada would resume negotiations only if the United States approaches them with a "right attitude." He also warned that Canada would respond with "dollar for dollar" tariffs on U.S. goods.

U.S. trade representative Jamieson Greer blamed Canada for introducing new demands, while Canadian officials said the United States had imposed a clause restricting the countries with which Canada could sign trade agreements. The impasse has raised concerns for businesses on both sides, which could face higher costs from the proposed 50% levy on nearly $20 billion of Canadian imports.

In response, Carney announced C$11 billion in funding for six icebreakers to be built at a Quebec shipyard, aiming to expand northern shipping routes and diversify Canada’s trade links. Ontario Premier Doug Ford, whose province hosts much of Canada’s auto manufacturing, criticized the tariff threat and suggested Canada could charge higher fees for its oil, gas, electricity and critical minerals. Trump later dismissed Ford’s remarks as "bluster" on his social-media platform.

The dispute also puts the future of the United States-Mexico-Canada Agreement (USMCA) in question. While Canada and Mexico have expressed interest in extending the pact for another 16 years, the United States has indicated it will not renew the agreement in its current form.