Canada Imposes Tariff on American-made Cars

Since midnight on Wednesday, Canada has imposed a 25% tariff on certain U.S. vehicles.

The measure is a direct retaliation against the duties applied by the U.S. since April 3.

Washington penalizes Canadian cars that do not meet the regional content requirements of the USMCA.

Canada is the largest buyer of vehicles manufactured in the United States.

Cars Without Sufficient Regional Content Lose USMCA Benefits

In 2024, it imported U.S. vehicles worth 35.6 billion Canadian dollars.

That amounts to approximately 25 billion U.S. dollars.

According to the USMCA, a vehicle must contain at least 75% North American content.

Cars that do not meet that criterion lose the tariff benefits of the agreement.

This applies even if they are manufactured within the U.S., Canada, or Mexico.

Canada already applied a 6.1% duty on vehicles outside the USMCA.

Now that figure rises to 25% in response to Trump’s sanctions.

Companies like VW, BMW, and Subaru manufacture cars in the U.S. that do not meet the minimum percentage.

Canadian Finance Minister François-Philippe Champagne defended the measure.

He stated that Canada will act against any «unjustified and unreasonable» tariff.

And he reiterated that his government will protect workers, businesses, and the national industry.

This new chapter adds to the trade war driven by Trump since he came to power.

The conflict intensified last week with new global tariffs of at least 10%.

Some countries like China are already facing duties of up to 104%.