The reignited trade war between the U.S. and its northern neighbor hit a fever pitch this week after President Trump proclaimed, “We don’t need Canada, they need us.”
Cars and parts from Canada, which cross borders several times before being put inside a vehicle, are currently subject to a 25% tariff, with some relief on parts that comply with stringent USMCA requirements . Trump said last week that a deal was close that would result in tariffs on Canadian vehicles dropping to 15%.
“We urge U.S. and Canadian negotiators to reach a deal that enhances North American auto competitiveness and brings about a successful USMCA review,” said Matt Blunt, head of the American Automotive Policy Council, a trade group that represents GM, Ford and Stellantis. However, Canadian Prime Minister Mark Carney said talks fell apart after U.S. officials sought to deny tariff relief to medium- and heavy-duty vehicles, which would make the country’s auto industry less competitive over time. The prospect of tariffs doubling on vehicle imports from Canada also is happening amid talks of overhauling the North American trade deal , known as the U.S.-Mexico-Canada Agreement, a pact that is crucial to the U.S. auto industry’s day-to-day business. Trump first hit Canadian imports with tariffs, including steel and vehicles, early in his second term, prompting Canada to levy retaliatory duties on American-made cars and metal products.
Canada—the U.S.’s second-largest trading partner—accounted for 8% of North American vehicle production in 2025, according to industry data provider Omdia. the country remains a key maker of cars and parts—not to mention a buyer of them While that is down from about 13% a decade ago as jobs and production have moved to Mexico and the U.S.. UBS analysts said Honda and Toyota would be most exposed to increased tariffs, with Canadian imports accounting for roughly one out of every 10 vehicles the companies sell in the U.S.
Thomas Kowal, chief executive of Michigan auto parts maker Leggera Technologies, said his company could benefit from the proposed tariffs, since its magnesium parts compete with aluminum from Canada. “My greater concern is the broader manufacturing industry,” Kowal said, citing years of disruptions from the Covid pandemic, inflation and tariffs. “I worry about how much additional pressure the industry can absorb.”
Canada is the biggest export market for larger American trucks.
