Canada has retaliated against US tariffs on automotive imports, while the EU prepares countermeasures, Kallanish reports.

The Prime Minister of Canada, Mark Carney, announced Thursday 25% tariffs on fully assembled vehicles imported from the US that are not compliant with the Canada-United States-Mexico Agreement (CUSMA), as well as 25% levies on non-Canadian and non-Mexican content of CUSMA-compliant fully assembled vehicles imported from the US.

Ottawa is also working on a framework for auto producers that incentivises production and investment in Canada. It is not clear when these measures, which do not apply to Mexico, will take effect.

“The priority of the automotive industry on both sides of the Canada-US border is continued, stable, free trade between the two jurisdictions,” comments David Adams, ceo of trade body Global Automakers of Canada. “The government of Canada must seek to secure continued free trade movement of vehicles and parts across North America through the ongoing implementation of the CUSMA by the three signatory countries.”

Carney’s announcement comes a day after US President Donald Trump unveiled sweeping tariffs on all countries, including a 25% tax on cars and certain auto parts imports from Canada and Mexico. This covers cars, light trucks, engines, transmissions, powertrain parts, and electrical components.

Dutch automaker Stellantis temporarily halted production at two assembly factories in Canada and Mexico, which resulted in temporary layoffs of 900 workers at five US plants and 4,500 in Canada.

Trump also imposed a 10% flat rate to all imports into the US from 5 April, which does not stack on the auto tariffs and exempts all goods compliant with the CUSMA. The EU, which faces an additional 20% rate from 9 April, is preparing a response.

“Reaching for tariffs as your first and last tool will not fix it. That is why, from the outset, we have always been ready to negotiate with the US,” says the European Commission’s president Ursula von der Leyen.

“At the same time, we are prepared to respond. We are already finalising a first package of countermeasures in response to tariffs on steel. And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail,” she adds.

Source:Kallanish