Canada’s tariffs to remain despite Trump postponing tariffs on many imports from Canada for a month
President Donald Trump signed executive orders Thursday that delay for a month 25% tariffs on many imports from Mexico and some imports from Canada amid widespread fears of the economic fallout from a broader trade war.
TORONTO (AP) — Canada’s initial retaliatory tariffs against the U.S. will remain in place despite President Donald Trump postponing 25% tariffs on many imports from Canada for a month, two senior Canadian government officials said.
Trump said Thursday that he has postponed 25% tariffs on many goods from Canada and Mexico for a month, amid widespread fears of a broader trade war.
Two senior Canadian governments official told the Associated Press that Canada’s first wave of response tariffs will remain. The officials spoke on condition of anonymity as they were not authorized to speak publicly about the matter.
Canada’s initial $30 billion Canadian (US$21 billion) worth of retaliatory tariffs have been applied on items like American orange juice, peanut butter, coffee, appliances, footwear, cosmetics, motorcycles and certain pulp and paper products.
Finance Minister Dominic LeBlanc said Canada has suspended a second wave of retaliatory tariffs after Trump signed the executive order to pause some duties. Ottawa had planned a further $125 billion (US$87 billion) in tariffs in three weeks on American products like electric vehicles, fruits and vegetables, diary, beef, pork, electronics, steel and trucks.
Ontario Premier Doug Ford, the leader of Canada’s most populous province, also said Thursday that, starting on Monday, the province will charge 25% more for electricity shipped to 1.5 million Americans in response to Trump’s tariff plan. Ontario provides electricity to Minnesota, New York and Michigan.
Ford said Ontario’s tariff would remain in place despite the one-month reprieve from Trump.
“The only thing that’s certain today is more uncertainty. A pause on some tariffs means nothing. Until President Trump removes the threat of tariffs for good, we will be relentless,” Ford posted on X.
Ontario and other Canadian provinces will keep American booze off shelves.
British Columbia Premier David Eby also said his province will introduce legislation in the coming days that would give it the ability to levy fees on commercial trucks traveling from the United States through the province to Alaska. He said Canadians won’t let up until the tariffs are taken off the table.
“Yet again the president is sowing uncertainty and chaos attempting to undermining our economy by implementing tariffs and then pulling them off,” Eby said.
Canadian Prime Minister Justin Trudeau said earlier Thursday that he expects Canada and the U.S. to be in a trade war for the foreseeable future after having what he called a colorful but constructive call with Trump on Wednesday.
A senior Canadian government official said the call became heated and Trump used profanity when Trump complained about protections in Canada’s dairy industry. The official, who spoke on condition of anonymity as they were not authorized to speak publicly about the call, said Trudeau did not use profanity.
White House Press Secretary Karoline Leavitt deferred to Trump’s comments made to reporters in the Oval office about the call.
Imports from Mexico that comply with the 2020 USMCA trade pact would be excluded from the 25% tariffs for a month, according to the orders signed by Trump. Imports from Canada that comply with the trade deal would also avoid the 25% tariffs for a month, while the potash that U.S. farmers import from Canada would be tariffed at 10%, the same rate at which Trump wants to tariff Canadian energy products.
Roughly 62% of imports from Canada would likely still face the new tariffs because they’re not USMCA compliant, according to a White House official who insisted on anonymity to preview the orders on a call with reporters. Half of imports from Mexico that are not USCMA compliant would also be taxed under the orders being signed by Trump, the official said.
Trump launched a new trade war Tuesday by imposing tariffs against Washington’s three biggest trading partners, drawing immediate retaliation from Mexico, Canada and China and sending financial markets into a tailspin.
A day after the new tariffs took effect, Trump had said he would grant a one-month exemption for U.S. automakers. The announcement came after Trump spoke Wednesday with leaders of Ford, General Motors and Stellantis, the parent company of Chrysler and Jeep. His press secretary said Trump told the chief executives to move auto production to the U.S. to avoid tariffs.
Despite Trump’s claim that the U.S doesn’t need Canada, nearly a quarter of the oil America consumes per day comes from Canada. About 60% of U.S. crude oil imports are from Canada, and 85% of U.S. electricity imports as well.
Canada is also the largest foreign supplier of steel, aluminum and uranium to the U.S. and has 34 critical minerals and metals that the Pentagon is eager for and investing for national security. Nearly $3.6 billion Canadian (US$2.7 billion) worth of goods and services cross the border each day.
Copyright 2025 The Associated Press. All Rights Reserved.
Canada suspends second wave of tariffs
Trudeau sees trade war for ‘foreseeable future’
Trump grants one-month exemption for US automakers
Experts: Auto industry can only tolerate Trump tariffs on Mexico, Canada for a few weeks
The auto industry can withstand only a few weeks of President Donald Trump’s 25% tariffs against Canada and Mexico until costs to automakers and suppliers rise astronomically, resulting in higher consumer prices and risking massive job losses, experts said Tuesday.
The industry reacted to Trump’s move at midnight to put 25% tariffs — the taxes paid on products when they cross international borders — on goods coming into the United States from Canada and Mexico.
Trump also increased tariffs on goods from China by another 10% on top of the 10% he enacted last month. Trump said the moves will push manufacturers to build more things in the United States.
The industry cannot quickly end foreign production and stand up domestic factories, with billions invested in long-term product cycles. In addition, U.S. automakers get a number of components for domestic assembly from Canada, Mexico and China. On top of that, the Detroit Three each build vehicles in Canada and Mexico that they sell in the United States. Ford Motor Co. and General Motors build vehicles in China that they sell in the States.
The tariffs mean the industry has weeks to figure out how to mitigate any production disruptions and absorb any increased costs before things really go off the rails, experts said.
“The tariffs will have a hugely negative impact on the auto industry and the economy as a whole,” said Sam Abuelsamid, vice president of market research at Telemetry Insights. “In the immediate future, the impact will be somewhat muted because of the inventory that’s already in the pipeline that hasn’t been subjected to the tariffs. But once we get past a few weeks, the effects will start to get quite profound even for vehicles that are assembled in the U.S.”
That’s because the auto industry doesn’t have the profit margins to fully absorb the extra 25% in costs, most of which will have to be passed on to consumers, Abuelsamid said.
“There are as many as 30,000 individual parts that go into a modern vehicle, with many of those ultimately crossing borders multiple times before a finished vehicle rolls off the assembly line,” Abuelsamid said. “From raw materials to increasingly complex subassemblies and then the final vehicle, each time something crosses the border, a tariff is assessed and paid by the importer, not the country that is exporting the product.”
He added: “For example, Ford will pay tariffs on gas V8 engines it brings in from Windsor and diesel V8s from Mexico that it puts into F-Series trucks. While those trucks are built in Dearborn, Kansas City and Louisville, those engines represent a significant portion of the value of the vehicle and there will be price increases to offset the tariffs on those engines and other components.”
Wall Street realized this potential impact on the automakers and reacted Tuesday by selling stock in the Detroit Three. GM’s stock closed down 4.52% to $45.22, Ford stock closed down 2.88% to $9.12 and Stellantis, maker of Chrysler, Dodge, Jeep, Ram and Fiat brands, saw its stock price tumble to close down 4.38% to $11.80.
The consensus among most experts is that costs to manufacturers will rise immediately, but they will absorb the added expense for a month or two.
“After that, consumers will likely see a 5% to 10% rise in prices,” said Sam Fiorani, vice president of global vehicle forecasting at Auto Forecast Solutions. “If cooler heads prevail, this first round will be over before April.”
Jeff Schott, a senior fellow at the Peterson Institute for International Economics, said estimates that the tariffs would increase vehicle prices by up to $12,000 will have an impact.
“That’s got to reduce demand for those vehicles from U.S. consumers because that’s too big a bite to bear in the pocketbook,” he said. “The big question is the duration of the tariffs and whether the tariffs will be extended to other countries.”
Edmunds.com data showed that the average transaction price for a new vehicle in January 2025 was $48,118 and for a used car was $24,402.
Beyond an affordability crisis is the fact that the auto industry is a pivotal part of the economy. It pumps $1.2 trillion a year into U.S. economy, making up about 5% of the gross domestic product. It also accounts for 10.1 million American jobs, according to the Alliance for Automotive Innovation.
Abuelsamid’s firm projects that many auto parts suppliers, especially smaller companies, cannot afford to absorb the tariffs, relocate their facilities or to split their efforts across two or three countries. Therefore, many may end up going bankrupt in the coming months and years, he said.
Put bluntly, Abuelsamid said, “My projection is that we will see about a 1.5 million to 2 million unit annual reduction in sales in the U.S. for each year the tariffs are in effect. This will, in turn, lead to the likely loss of hundreds of thousands of jobs across the automotive ecosystem and into the wider economy that depends on people in the industry spending their wages. If the tariffs persist for any length of time, I expect it to lead to a recession within a year and an increase in unemployment.”
Automakers, battery makers and suppliers are investing billions in U.S. manufacturing and to modernize the industrial base, said John Bozzella, CEO of Alliance for Automotive Innovation in a statement.
“But it’s worth remembering the sheer scale of the industry and the size of these automotive and advanced manufacturing facilities,” Bozzella said. “They’re massive. You just can’t relocate automotive production and the supply chain overnight.”
He noted that auto tariffs in North America could end up increasing costs on consumers before jobs come back to the country.
Wall Street analysts are counting on the tariffs being in place for weeks rather than months.
“If these tariffs stay in place for longer than six months, we estimate on average a $4,000 to $5,000 increase in car prices,” said Dan Ives, global head of technology research and managing director at Wedbush Securities. “Ford has limited flexibility to move its manufacturing footprint and GM gets hit, but not as bad as Ford. It’s a mini disaster in the making for the auto industry if it continues.”
Erik Gordon, University of Michigan Ross School of Business professor, believes the tariffs will be short unless “either country makes a false move.” Gordon said, noting that Trump doesn’t want to follow the usual international negotiation path that takes years to get an agreement to change.
“Traditionally, most of the time is spent on foot dragging by the country that doesn’t want a change and on visits with lavish dinners, announcements of significant progress, but no actual progress,” Gordon said. “The president wants fast, real progress. If he sees it, he will let up on the pressure, but if Mexico or Canada try the usual foot dragging or engage in anti-U.S. rhetoric or retaliation, he will be more likely to increase the pressure than decrease it.”
Beyond these tariffs, Trump has said he intends to impose tariffs “in the neighborhood of 25%” on imported autos and similar tariffs on semiconductors and pharmaceutical imports, according to Reuters. He has said the levies on vehicles would come as soon as April 2.
The Detroit Three directed the Free Press to a comment by the American Automotive Policy Council on their behalf. In the statement, council President Matt Blunt cited the U.S.-Mexico-Canada Agreement negotiated during Trump’s first term: “We continue to believe that vehicles and parts that meet the USMCA’s stringent domestic and regional content requirements should be exempt from the tariff increase.”
The purpose of the USMCA was to create what Trump considered a more balanced trade arrangement than the North American Free Trade Agreement reached in the 1990s.
“Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market,” Blunt said.
MichAuto, the state’s only automotive and mobility association, said the 25% tariffs on Canada and Mexico threaten Michigan’s business climate and represent a “bad-faith” trade policy.
“Unilaterally imposing tariffs before United States-Mexico-Canada Agreement renegotiations even begin will undermine diplomatic processes and risk damaging Michigan’s relationships with its closest trading partners,” said Glenn Stevens Jr., executive director of MichAuto and vice president of automotive and mobility initiatives for the Detroit Regional Chamber.
In a statement to the Free Press, Stevens said, “As MichAuto has continued to advise, the tariffs’ harmful effects will extend beyond trade relationships and will cause businesses to purchase and produce fewer products, hire fewer employees and increase prices to the detriment of consumers. Michigan’s economic viability and business attractiveness will be reduced to collateral damage.”
Stevens urged the Trump administration and policymakers to prioritize “constructive engagement over punitive measures” which will damage state and nationwide businesses and consumers, he said.
Similarly, the American International Automobile Dealers Association CEO Cody Lusk said Tuesday in a statement that dealers and their customers are already reeling from rising car and parts prices, high interest rates and insurance costs, and the new tariffs pose an additional challenge to affordability.
“Tariffs can play an important role in balancing trade relationships and ensuring national security, but increasing barriers to trade also puts added pressure on the wallets of American families,” Lusk said. “In this case, tariffs could directly contribute to thousands of extra dollars on sticker prices. AIADA’s 9,400 members, seeking to protect their customers and their 560,000 American employees, urge our leaders and our trading partners to come together to negotiate a swift and practical end to these tariffs.”
Autos Drive America, a group that represents international automakers who are in the United States, also addressed the issue of affordability for car buyers.
Jennifer Safavian, CEO of Autos Drive America, said in a statement, “We are disappointed the U.S., Mexico and Canada could not reach a solution to avoid tariffs, which will undermine North American supply chains and cause costs to rise for U.S. auto manufacturers, and ultimately, the consumer. We urge the three countries to find a swift resolution that maintains the strength of the North American auto manufacturing sector.”
The UAW is the outlier, believing that tariffs will benefit the industry, at least the autoworkers in the industry.
“Corporations have been driving a non-stop race to the bottom by killing good blue-collar jobs in America to go exploit some poor worker in another country by paying poverty wages,” the union said in a statement. “Tariffs are a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals. We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class.”
The union is in active talks with the Trump administration, it said, to end the “free trade disaster.”
“There’s been a lot of talk of these tariffs ‘disrupting’ the economy,” the union’s statement read. “But if corporate America chooses to price-gouge the American consumer or attack the American worker because they don’t want to pay their fair share, corporate America bears the blame for that decision.”
Ford leadership has been at the forefront trying to educate the Trump administration on the damage that will be done to the auto industry if any long-term tariffs are enacted against Canada and Mexico. Ford Executive Chair Bill Ford has said he has had phone conversations with the president on the topic and felt confident that Trump understands the ramifications and wants a strong American manufacturing base.
Ford CEO Jim Farley was blunt about it last month during a talk at an investor conference.
“Let’s be real honest: Long term, a 25% tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen,” Farley said at the Wolfe Research Auto, Auto Tech and Semiconductor Conference held in New York on Feb. 11.
During Ford’s fourth-quarter earnings call with investors days before that, Farley told Wall Street the automaker could withstand tariffs if they are short-term.
“In the weeks scenario we’re in good shape, if it’s a number of weeks,” Farley said in early February. “With changing our stock level of our components, both ourselves and to our suppliers, and changing our manufacturing patterns in both Mexico, especially, and the U.S, we can make sure nothing crosses the border for a couple of weeks. We have good stock situation with our dealers right now.”
Farley said more than 80% of Ford’s vehicles are made in the United States, all of its transmissions are made here and more than half of the engines, too.
The problem is Ford has no excess capacity at its plants to shift production from plants outside the States to the United States, he said.
“Our teams in the U.S. are flat-out already,” Farley said. “So we would have to make some major strategy shifts in the U.S., build new plants, et cetera if this persists. Obviously, it’s a devastating impact.”
A key point to the tariffs that Farley has repeatedly pointed out is the fact that South Korea-based automaker Hyundai-Kia is importing 600,000 vehicles a year into the United States with no incremental tariff and Japan-based Toyota also imports 500,000 vehicles into the country annually with no incremental tariffs.
“If we’re going to have tariff policy that lasts for a month or whatever it’s going to be, years, it better be comprehensive for our industry,” Farley said. “We can’t just cherry-pick one place or another. This is a bonanza for our import competitors.”
Farley’s assessments are not “overly dramatic,” said David Whiston, autos analyst at Morningstar.
“Before NAFTA, there was APTA done in 1965 by LBJ, which had free trade for the U.S. and Canadian auto industries, so 60 years of free trade has been blown up instantly,” Whiston said. “Supply chains are interwound across all three nations, so the automakers can’t just quickly move all the production to satisfy U.S. demand to U.S. plants. It takes time and billions of dollars.”
Whiston said it’s hard to say how long the industry will wait before it makes massive investments in new facilities, but he believes the industry is probably waiting and hoping for an agreement on fentanyl and immigration issues before it has to make that call.
Still, there remains the imposed 25% tariff on all steel and aluminum imports into the United States with no exceptions or exemptions and the threat of 25% tariffs on all imported autos coming on April 2.
“On the April 2 ones, no one knows yet if there will be a USMCA carveout exemption or if Canadian/Mexican made vehicles would be exempt from the April 2 ones since the March 4 ones are now in effect,” Whiston said.
According to data from Edmunds.com, through February, 48.6% of all new vehicles sold in the U.S. were built in the United States, 17.4% were built in Mexico, 7.4% in Canada and 26.5% in other countries.
David Soberman, a professor of marketing at the Rotman School of Management at the University of Toronto, called the imposition of tariffs by the Trump administration “very unfortunate” and said it be would hard on both the Canadian and U.S economies.
“It is already causing a lot of instability in the stock market. I believe it will fuel inflation in the U.S. It is important to remember that it is Americans who have to pay Donald Trump’s tariffs if they continue to buy Canadian goods,” Soberman said.
Asked about the impact on the auto industry in both countries, Soberman pointed “especially” to GM, Ford and Stellantis and their key parts and components suppliers.
“Since 1965, when the two countries signed an Auto Pact, the industries in both countries are integrated, almost like there isn’t a border,” he said.
U-M’s Gordon noted that carmakers have had more than a month to stockpile inventory from Canada and Mexico, but probably can’t go longer than 30 days without facing shortages that could interrupt production of certain models. For now, he said, buyers will still have lots of cars to choose from, but not every model.
“Car companies have to decide how to rearrange U.S. production capacity for an unknown length of time because they don’t know how long the tariffs will last or how high they will end up being,” Gordon said. “That won’t be easy. They already projected EV demand inaccurately and got whipsawed. They are not looking forward to getting whipsawed on tariffs.”
Alliance for Automotive Innovation’s Bozzella holds out hope that Trump understands the importance of a healthy and globally competitive auto industry and will reverse course.
“He’s stressed his commitment to the industry and autoworkers during the campaign and since the inauguration,” Bozzella said. “We look forward to working with the administration on solutions that achieve the president’s goals, keep the industry competitive and in a position to support the country’s economic and national security in the years ahead.”
Free Press staff writer Eric D. Lawrence contributed to this report.
Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.
This is a developing story and will be updated.
Profits won’t cover added costs
Job losses, supplier closures, recession outlook
A ‘mini disaster for the automotive industry’
Michigan’s economic viability at stake
Farley: ‘It’s a devastating impact’
Car companies face decisions
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