Updated March 27, 2025 @ 1:30pm
U.S. President Donald Trump escalated his tariff threats against Canada on Thursday — after a senior White House official cautioned Canadians to hold off on reacting to auto tariffs because relief could be on the way.
Trump posted on social media that if "the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!"
Trump's comments follow his move Wednesday to impose 25 per cent tariffs on all automobile imports to the U.S. starting next week. This latest episode in Trump's growing global trade war pushed some automakers' stock prices down as rattled markets struggled to anticipate the president's next trade moves.
Despite Trump's heated words on social media, a senior Ontario government source not authorized to speak publicly said U.S. Commerce Secretary Howard Lutnick called Premier Doug Ford Wednesday to assure him that there would be a "significant easing" of automobile tariffs on vehicles made under the rules of the Canada-U.S.-Mexico Agreement, also called CUSMA.
The source said Lutnick told Ford that while the tariffs would not disappear, Canadian companies could end up with a significant advantage over vehicles imported from other countries.
Trump signed an executive order Wednesday to implement duties on automobile imports starting April 3. A fact sheet provided by the White House said automobiles imported under CUSMA, which was negotiated during the first Trump administration, will only be tariffed on the value of content not made in the United States.
The executive order also imposes tariffs on certain auto parts, including engines, transmissions and electrical components. The move is likely to sow more confusion in the North American automotive sector — a highly integrated continental industry that sends vehicle parts across borders multiple times before completion.
Prime Minister Mark Carney interrupted his election campaign Thursday and returned to Ottawa to lead a meeting of the Canada-U.S. relations cabinet committee. Carney has called the auto tariffs a "direct attack" on Canadian autoworkers and promised swift action and support.
The European Union and Canada have not issued statements to indicate they're collaborating on a response to the new tariffs.
European Commission President Ursula von der Leyen said in a media statement that the EU's executive branch would assess the impact of the duties and vowed to protect consumers and businesses.
Trump said the automobile tariffs would be permanent and automakers would "have to move their parts divisions back to the United States."
Manufacturers and experts have said redistributing a deeply integrated North American industry would not be easy or quick.
"The result is higher costs for manufacturers, price increases for consumers, and a less competitive industry," Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers' Association, said in a media statement.
"We continue to urge all parties that all (CUSMA)-compliant parts, components, and vehicles be free of tariffs under that agreement."
The tariffs will be felt across the American supply chain, said MichAuto executive director Glenn Stevens Jr.
"This means jobs lost, increased input costs and pressure on the balance sheets of companies large and small," said Stevens Jr., who represents the automobile association in Michigan.
"Companies that export vehicles and parts to the U.S. will need to make decisions on whether existing facilities in the U.S. have capacity or can be expanded."
This report by The Canadian Press was first published March 27, 2025.
