US President Donald Trump said he will increase tariffs on Canadian vehicles and parts to 50% from 1 January 2027, deepening the trade conflict between the neighbouring countries.

Trump announced the decision on his Truth Social platform on Monday, saying the new rate will apply to all cars, trucks, automotive parts and steel from Canada.

The current US tariff on Canadian vehicles stands at 25% for non-US content, whilst imported steel already faces a 50% duty.

The announcement follows failed negotiations between Washington and Ottawa last Friday, which were meant to prevent new 50% US tariffs on select Canadian goods. Those duties took effect on Saturday.

Canada hits back with retaliatory measures

Canadian Prime Minister Mark Carney walked away from what he called a “bad deal” and announced retaliatory tariffs targeting US steel, dairy, agricultural equipment, pulp and paper, and electronics. Canada’s response will take effect on 8 September.

The United States is Canada’s biggest trading partner by far, with 70% of Canadian exports going to its southern neighbour. Canada is the United States’ second biggest trading partner in goods this year, behind Mexico, according to Census Bureau data.

Public support for Carney’s stance

The Angus Reid Institute found that three in four Canadians supported Carney’s decision to walk away from trade talks. However, poll findings released on Sunday showed that two in five Canadians have concerns about their jobs.

Trump charged on Monday that “Canada has been ripping off the United States of America for years,” adding that “we don’t need Canada, they need us.”

The White House said it imposed the 50% tariffs due to “discriminatory treatment” by Canada against US alcohol, automobile and dairy products.

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Talks collapse after marathon negotiations

Trump had delayed the tariffs by three days last week as both sides intensified negotiations. Top Canadian negotiator Dominic LeBlanc and his team spent hours at US Trade Representative Jamieson Greer’s office in Washington on Thursday and Friday, but talks collapsed late Friday night.

The latest duties hit about 5.5% of Canadian goods entering the United States, worth approximately $20 billion in products ranging from hockey sticks to cement.

Greer told the New York Times on Saturday that the Trump administration had offered to eliminate a 10% tariff on softwood lumber and reduce the 25% autos tariff. Washington was also ready to cut steel tariffs from 50% to 25% for most Canadian steel.

Both sides have not scheduled further negotiations, with Carney saying late Friday that he had decided to suspend trade talks.

Besides the tariffs dispute, both countries must also agree on revisions to the US-Mexico-Canada free trade agreement, which Trump has declined to renew in its current form.

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