President Donald Trump said Monday he would impose 50% tariffs on all Canadian cars, trucks, auto parts and steel on Jan. 1 as leaders in Ottawa vowed to retaliate against the U.S. import taxes.
The move deepens a trade war that escalated over the weekend. Trump’s earlier 50% tariffs, which took effect Saturday on a range of Canadian goods including wine, cheese, cement and electronics, largely exempted autos and steel.
Trump’s Jan. 1 threat would raise tariffs on Canadian autos and auto parts to 50%, while Canadian steel already faces a 50% tariff under a separate law. Talks broke down Friday, and Prime Minister Mark Carney has said Canada will hit back “dollar for dollar” beginning Sept. 8.
No federal agency has published an estimate of what the tariffs cost the U.S. importers who pay them or the consumers who may bear higher prices. The White House has detailed the harm it says Canada’s trade barriers did to U.S. exporters, including a 22% drop in U.S. auto exports to Canada, or $5.6 billion, over the year ending in March, and an 81% drop in alcohol exports, or $582 million, but has issued no projection of the cost to Americans.
While no federal figure exists, independent analysts have measured the broader tariff program the Canada duties belong to. The Tax Foundation, a nonpartisan tax-policy nonprofit, estimates President Trump’s tariffs will raise taxes by an average of $840 per U.S. household in 2026. The Yale Budget Lab, a nonpartisan policy research center, puts the figure at about $1,100. The Tax Foundation pegs the Section 338 Canada duties alone at about $16.1 billion in affected imports a year.
In a Truth Social post Monday, Trump wrote that tariffs on “all Cars, Trucks, both large and small, Automotive Parts, and Steel” would rise to 50% on Jan. 1, adding, “Build in the U.S. and there are ZERO TARIFFS.”
Trump said Canada “will be treated like a State no longer,” a reference to his repeated suggestion that Canada join the United States. The existing Section 338 duties carry a 50% ceiling, the maximum the statute allows. Canadian steel already faces a 50% tariff under Section 232, while Canadian autos and parts are taxed at lower Section 232 rates. The administration has not said which authority it would use for the proposed January increase.
Despite the “motor vehicles” label, the Section 338 duties now in effect exempt finished cars, trucks and their parts, along with steel, aluminum, lumber and pharmaceuticals. Those are covered instead under Section 232, according to U.S. Customs and Border Protection guidance. Also exempt: energy, potash, fish and critical minerals. The 50% tariff applies to other covered Canadian goods not otherwise exempt.
U.S. Trade Representative Jamieson Greer, who led the talks, played down the impact, telling CNBC the duties cover “about 5%” of what Canada sends the U.S. and amount to just “0.06%” of overall U.S. consumption. Asked what that 5% costs the U.S. importers who pay the duties or the consumers who may bear higher prices, USTR did not respond by deadline.
Business groups warned of higher costs. The U.S. Chamber of Commerce said new tariffs would “drive up costs for U.S. families” and risk the “13 million American jobs” tied to the North American trade pact. The Aluminium Association of Canada said U.S. buyers already pay $1,500 to $2,000 more per ton than European customers.
Canadian leaders vowed to retaliate. Ontario Premier Doug Ford said Trump could “kiss my a‑‑” in a morning radio interview, and at a Hamilton news conference proposed a surcharge on the electricity Ontario sends to Michigan, New York and Minnesota. Ford also said cutting exports and pulling U.S. access to Canadian critical minerals would be “on the table” if Trump escalates.
Ford said he could not act alone: “I can’t do this alone, folks. I need every premier playing on team Canada.”
Former Prime Minister Jean Chrétien urged Ottawa to tax energy and potash exports, arguing “it’s not us who pays, it’s the Americans.” Many of the goods they named, including energy, potash and critical minerals, are some of the same commodities the U.S. exempted from its own tariffs.
Vice President JD Vance, speaking in Maine on Monday, leaned into the statehood taunt. “Canada is a state. Sorry, Freudian slip,” he said, before accusing Canada of treating Chinese goods more favorably than American ones. Neither he nor the president put a number on what the escalating tariffs will cost Americans.
