Trump vows tariff retaliation in escalating trade dispute with Canada

US President Donald Trump said the US will hit Canada with 50% tariffs on all cars and trucks, automotive parts and steel starting Jan. 1, 2027, as a trade dispute between the two countries heats up after trade talks failed Aug. 21.

The action would double tariffs on cars and create a fresh 50% tariff on auto parts, but Canadian producers already pay a 50% tariff on most steel products.

The US imposed a 50% tariff on a wide range of Canadian products Aug. 22 and, in response, Canada promised to hit back with dollar-for-dollar countermeasures starting Sept. 8.

Trump's threat of more tariffs, made in an Aug. 24 social media post, is a sign of souring trade relations between the neighboring countries that have long had deeply integrated supply chains.

"Not sustainable, and NOT ANYMORE!" Trump said, using all caps. "On January First, 2027, tariffs on all cars, trucks, both large and small, automotive Parts, and steel, will be increased to 50%. Build in the US and there are ZERO TARIFFS."

In the social media post, Trump accused Canada of taking advantage of the US over Canadian tariffs on US farm products. Trump flagged Canada's dependence on the US for trade, suggesting that the US does not need Canada.

"On trade, and in other ways, also, they are among the worst nations in the world to deal with," Trump said. "They feel entitled."

The Trump administration has previously flagged that Canada is one of the only countries other than China to retaliate against US tariffs, which have become a favorite tool of Trump's as part of his protectionist trade strategy.

Auto parts face new duties

As it stands, Canada faces a 25% tariff on vehicles, but not parts, though only on the non-US content value for products compliant under the US-Mexico-Canada Agreement, a wide-ranging trade pact.

The new 50% tariff would make Canadian vehicles and parts, which use a lot of metals like steel and aluminum, far more expensive for US buyers.

Many steel products already face a 50% tariff, and it is unclear if any new steel products will face new duties from Trump's threat. The US exported $9.9 billion in iron and steel products to Canada in 2025, while the US imported $8.9 billion in the materials from Canada that year, according to S&P Global Energy Global Trade Analytics Suite Intelligence data.

The White House did not respond to a question about the new steel tariff.

Canada hits back

In an Aug. 22 address, Canadian Prime Minister Mark Carney said the US attacked Canada with the 50% Aug. 22 tariff, and that Canada's countermeasures would target sectors including steel. He also said there would be fewer opportunities to cooperate with the US on critical minerals.

Canada has said it would not target sensitive exports like energy, but at least one provincial leader wants the country to use more of its leverage.

"The reliable supply of energy and critical minerals remains two of Canada's most significant strategic advantages," Ontario Premier Doug Ford said in an Aug. 14 letter to Carney released on Aug. 22. "Electricity, energy and critical minerals infrastructure should be viewed as Team Canada assets that contribute to Canada's broader negotiating leverage."