Donald Trump Threatens To Double Tariffs On Canadian Autos, Parts From January 1 As Trade War Escalates

US President Donald Trump on Monday threatened to raise tariffs on Canadian cars, trucks and automotive parts to 50% from Jan 1, 2027, as the trade dispute between the two neighbours intensifies.

"On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%," Trump wrote on Truth Social.

The current US tariff on the non-US content of Canadian automobiles is 25%, while steel imported into the US generally attracts a 50% duty.

Canada retaliates after talks fail

Trump's announcement followed the failure of Washington and Ottawa to reach an agreement on Friday to prevent new 50% US tariffs on selected Canadian products. The duties came into effect on Saturday.

Canadian Prime Minister Mark Carney subsequently announced retaliatory tariffs against the US after rejecting what he called a "bad deal."

Canada's measures, scheduled to take effect on Sept 8, will target US steel and dairy industries as well as agricultural equipment, pulp and paper, and electronics.

The White House accused Canada of "discriminatory treatment" of US alcohol, automobile and dairy products while imposing the 50% tariffs.

Trump had delayed the implementation of the tariffs by three days as negotiations intensified. Canadian negotiator Dominic LeBlanc and his team held lengthy discussions at US Trade Representative Jamieson Greer's office in Washington on Thursday and Friday, but the two sides failed to reach an agreement.

The latest duties affect about 5.5% of Canadian goods entering the US, worth around $20 billion, and cover products ranging from hockey sticks to cement.

Trump steps up attack

On Monday, Trump alleged that "Canada has been ripping off the United States of America for years" and added that "we don't need Canada, they need us."

Greer told the New York Times on Saturday that the Trump administration had offered to eliminate a 10% tariff on softwood lumber and reduce the 25% automobile tariff. Washington was also prepared to cut tariffs on most Canadian steel from 50% to 25%, according to Greer.

Carney said late Friday that he had decided to suspend trade negotiations with the US. Greer told CBS on Monday that no further negotiations had been scheduled.

USMCA talks also loom

Apart from the escalating tariff dispute, the US and Canada must also negotiate revisions to the US-Mexico-Canada free trade agreement (USMCA), which Trump has declined to renew in its current form.

Relations between the neighbours have also been strained by Trump's repeated threats to make Canada the 51st US state, which have antagonised many Canadians.