Canada Applies 25% Tax on Imported Cars Not Complying with CUSMA from the United States

The Canadian Ministry of Finance announced countermeasures earlier this week targeting vehicles that do not comply with the Canada-United States-Mexico Agreement (CUSMA) imported from the United States with a 25% tariff. "These countermeasures will remain in effect until the United States removes tariffs on the Canadian auto industry," the ministry said in a statement. Canada announces measures to deal with imported cars from the United States. On March 4, 2025, the United States imposed a series of tariffs on Canada: a 25% tariff on Canadian goods and a 10% tariff on energy and potassium exports. These tariff levels were later adjusted to apply only to products not compliant with CUSMA. On March 12, an additional 25% was applied to Canadian steel and aluminum products. In a move that escalates trade tensions, a 25% tariff on Canadian cars was implemented on April 3, directly affecting the automotive industry and over 500,000 Canadians employed by the sector nationwide. Canada's Minister of Finance, Mr. François-Philippe Champagne, stated that Canada's countermeasures against the unreasonable tariffs imposed by the United States on Canada's automotive industry will take effect at 12:01 AM Eastern Time on April 9, 2025. Canada's Minister of International Trade and Intergovernmental Affairs, Mr. Dominic LeBlanc, stated, "Canada is being targeted unnecessarily and unfairly by these tariffs, and the decision of the United States leaves us no choice but to respond to protect the interests, workers, and businesses of Canada." Countermeasures include: a 25% tariff on fully assembled vehicles that do not comply with CUSMA imported into Canada from the United States, and a 25% tariff on non-Canadian and non-Mexican content in fully assembled vehicles that comply with CUSMA imported into Canada from the United States. This means that if a vehicle complies with CUSMA, parts not from Canada or Mexico will be taxed. The current scope of tariffs applies to goods valued at over 30 billion dollars. However, the Canadian government has stated that they will increase the scope to about 155 billion dollars for imported goods if the tariffs from the United States remain in place. "Canada continues to respond strongly to all unreasonable and unjust tariffs imposed by the United States on Canadian products. The government is committed to eliminating these U.S. tariffs as soon as possible and will protect workers, businesses, the economy, and the Canadian industry," Minister Champagne said. China and the EU's reaction to Trump's tariffs On April 4, 2025, China announced it would impose a 34% tariff on all imports from the United States starting April 10. In response, Trump demanded that China remove the tariffs or face an additional 50% tax, raising the total tax rate to around 104%. The Chinese embassy in the United States stated that China would not back down. "The escalating tariff threat from the United States against China exacerbates their mistakes and further exposes their coercive nature, which China will never accept," the embassy posted on X, adding that "China will fight to the end if the U.S. side continues to deliberately go down the wrong path." On March 12, 2025, the EU, in retaliation for the U.S. imposing tariffs on steel and aluminum, reinstated previously canceled tariffs on bourbon and motorcycles from the U.S., effective April 1. Additionally, another €18 billion worth of U.S. goods will also face an additional proposed tariff to be applied in mid-April.