Canada To Announce Retaliatory Tariffs Against US as Trump Threatens 50% Auto Duties

Canada is preparing to announce retaliatory tariffs against the United States on Tuesday after US President Donald Trump escalated the trade dispute, warning Canadian leaders to “fall in line” or face consequences “far WORSE” than the tariffs already imposed. The move comes after Prime Minister Mark Carney ended trade talks with Washington and as the US threatens higher duties on Canadian cars, auto parts and steel.

According to Indian Express, an official familiar with Ottawa’s plans said Canada is preparing fresh tariffs but may no longer respond to US duties on a dollar-for-dollar basis. Instead, Carney has indicated that Ottawa could use more targeted measures to protect Canadian workers and businesses. The dispute has increasingly moved beyond tariffs to questions over the future of Canada’s major industries, its trade relationships and its economic dependence on the US.

Why did Trump tell Canada to ‘fall in line’?

Trump intensified his criticism of Canada on Monday, telling its leaders to “fall in line” or face consequences “far WORSE” than the tariffs already imposed. He also threatened new 50 per cent tariffs on Canadian vehicles, auto parts and steel.

Trump has said the 50 per cent rate on Canadian cars, trucks and auto parts will take effect from 1st January, up from the current 25 per cent tariff. He has also accused Canada of treating American farmers unfairly.

The latest escalation follows Carney’s decision late on Friday to walk away from trade talks with the Trump administration, shortly before a US deadline that would have added a 50 per cent levy on nearly $20bn worth of Canadian imports.

Carney has accused Washington of trying to subordinate Canada and dismantle major Canadian industries, including its auto, steel and aluminium sectors.

Canada be treated as a ‘subsidiary’?

Carney has rejected the idea that Canada should accept a negotiating position in which it is treated as subordinate to the US.

“An attitude at the negotiation table that Canada is a subsidiary of the United States” is “not something we’re going to accept,” Carney said.

He was even more direct in French, saying, “We learned during the negotiations that the Americans want to destroy our major industries, including autos, steel and aluminium. That was one of the main reasons we said no. It was a bad deal.”

Indian Express reported that Carney also questioned how dependable the US is as a partner, saying Canada is finding steadier friends almost everywhere else in the world, except in the US and Russia. He has said Ottawa remains ready to resume negotiations if Washington returns with a fairer approach.

Carney has argued that the US proposals on the auto sector would gradually dismantle Canadian production. Describing the long-standing cross-border automotive relationship, he said, “This is the most successful automotive partnership in history.”

Canadian officials have said Washington introduced last-minute demands that Ottawa considered unacceptable. One proposal would have restricted the countries with which Canada could negotiate trade agreements.

US officials have disputed that account. US Trade Representative Jamieson Greer said Canada had introduced late changes and said Ottawa “wanted more.”

How did Doug Ford respond to Trump?

The dispute has drawn a strong response from Ontario Premier Doug Ford, whose province is at the centre of Canada’s vehicle manufacturing industry.

Asked about Trump’s tariffs and threats, Ford told the US president, “Kiss my a**.”

Ford also suggested that Canada could increase the price of oil, gas, electricity and critical minerals supplied to the US. He said he planned to speak with Carney about possible ways to respond to Washington.

Trump answered on his Truth Social platform by accusing Ford of bluster.

Ford later told the Associated Press that Trump had underestimated Canadians’ willingness to absorb economic pain rather than give in to US demands.

“We’re all in,” Ford said. “Up here, we’re at a fever pitch; everyone’s in for an economic war. They know they’re going to have to sacrifice.”

Trump then called Ford “the less charismatic, intelligent, and overall unimpressive brother of the late, great, Rob Ford” and again referred to Carney as “Governor Carney”.

Ford responded, “If you think an insult from him hurts me? Well, bring it on, buddy, I’m ready.”

Ford said Ontario supplies electricity to around 1.5 million homes and businesses across the US and warned that nothing was off the table. Ontario has previously used electricity as leverage, imposing a surcharge on power sold to Michigan, Minnesota and New York during an earlier stage of the dispute.

Why has the auto industry become the main battleground?

The automotive sector has become central to the dispute because Canadian and US manufacturing are closely integrated. Ontario is home to Canada’s largest vehicle plants, while Ford, General Motors and Stellantis operate major assembly facilities there.

The supply chain stretches across the border, with vehicle parts sometimes crossing between Canada and the US several times before production is completed. The industry supports tens of thousands of jobs through assembly plants and the wider supply chain.

Ford has accused Trump of seeking to hollow out Canadian industry and shift production to the US instead of negotiating an agreement that protects the existing cross-border system.

According to Indian Express, Greer has argued that Canada’s auto industry exists in large part because of a trade arrangement dating back to the 1960s. That agreement gave Canadian manufacturers access to the US market in return for building vehicles locally.

The dispute has raised concerns over an automotive relationship built around decades of integrated production between Ontario and US states including Michigan.

How is Canada trying to reduce its reliance on the US?

The tariff confrontation has coincided with Carney’s efforts to diversify Canada’s trade and reduce its long-standing dependence on the US.

Carney has announced C$11bn, or about $7.95bn, in funding for six icebreakers to be built at a Quebec shipyard for the Canadian Coast Guard. The vessels will replace an ageing fleet and are intended to help open winter shipping routes through Canada’s northern and Atlantic waters.

Canada nevertheless remains a major energy supplier to the US. Canadian government figures show that Canada accounts for around 60 per cent of total US crude oil imports and supplies close to all of US natural gas imports.

Ford has disclosed that he opposed an earlier draft agreement Carney had been considering. He also said he was not prepared to allow US-made liquor back on to Ontario shop shelves as part of any deal.

Ford said he understood Washington had also pushed for provisions limiting Canada’s ability to negotiate trade agreements with other countries without US approval. Carney has rejected that demand, calling it unacceptable and a matter of Canadian sovereignty.

The disagreement has also exposed tensions over language and culture. Carney said Washington viewed protections for French and Canadian culture as trade irritants, while Canada considers those protections fundamental rights.

What does the dispute mean for USMCA?

The widening trade fight has raised broader questions about the future of the United States-Mexico-Canada Agreement, or USMCA, which governs a large part of trade between the three countries.

The agreement underpins around $1.6 trillion in North American trade. Canada and Mexico want it extended for another 16 years, while the US has said it will not renew the pact in its current form.

Analysts at Oxford Economics have warned that the risk of USMCA unravelling has increased. A breakdown could push Canada into recession and leave the country on a permanently lower growth path.

With Canada preparing fresh retaliatory tariffs and Trump threatening additional duties, the dispute has expanded beyond the immediate question of tariffs. It now encompasses the future of Canada’s auto, steel and aluminium industries, Ottawa’s ability to negotiate trade agreements independently, its efforts to diversify beyond the US and the wider economic relationship between the two countries.