Canada faces 50% U.S. auto tariffs in January as talks stall
A threatened 50% U.S. tariff on Canadian cars, trucks and auto parts is set to take effect Jan. 1, doubling today's 25% rate. U.S. Trade Representative Jamieson Greer says several issues remain quite difficult to resolve, and the Trump administration says it is not inclined to drop existing tariffs.
Canada has less than three months to avoid a sharp jump in U.S. tariffs on its auto industry, and Washington's top trade negotiator is not sounding hopeful.
A threatened 50% U.S. tariff on Canadian-made cars, trucks and auto parts is set to begin Jan. 1, 2027, Yahoo Finance Canada reported. That would double the current 25% tariff on vehicles and parts, a rate officials had discussed cutting to 15% before talks collapsed in August. President Donald Trump has not said whether vehicles that meet the rules of the U.S.-Mexico-Canada trade agreement would stay exempt.
Speaking at a G20 meeting of trade ministers in Milwaukee last week, U.S. Trade Representative Jamieson Greer said technical talks are continuing. "The reality is there are a handful of outstanding issues that are quite difficult to resolve," he told reporters, according to CBC News.
Greer also played down Trump's suggestion that a deal could come within weeks. "I'd emphasize the 'may' in that part of the situation," he told Bloomberg News, as quoted by CBC. He said the United States is "not inclined to go to zero tariffs because we're trying to reshore," or bring factory work home.
Canada argues that tariffs on steel, aluminum and autos make little sense, because the two economies have been tightly linked by decades of free trade. Canada buys more American-made goods than any other country, CBC noted. Prime Minister Mark Carney said Canada "stands ready to negotiate in good faith."
Some background: Canada pulled its negotiators out of Washington in August after what Carney called a series of last-minute American changes. Ottawa worried that U.S. tariffs on medium and heavy trucks could make a GM plant in Oshawa, Ontario, uncompetitive and put planned Ford production in Oakville at risk.
The trade fight is already costly. The United States imposed 50% tariffs on $27.6 billion of Canadian goods on Aug. 22, and Canada answered with its own tariffs on the same value of U.S. imports on Sept. 8, Yahoo Finance Canada reported. University of Calgary economist Trevor Tombe estimates the duties now in place could cost about 87,000 Canadian jobs, before any new auto tariffs.
What we know: The 50% auto tariff is scheduled for Jan. 1, and talks have not closed the gaps.
What we don't: Whether a deal arrives in time, or whether the deadline moves.
Where outlets agree CBC News and Yahoo Finance Canada both quote Greer saying a handful of outstanding issues are quite difficult to resolve, and both report the U.S. is not inclined to drop its tariffs.
Where they differ Trump has said a deal with Canada could come within weeks, while Greer stressed that a deal only may happen and that gaps remain.