- Canada is targeting the U.S. auto market as part of its retaliatory tariffs.
- The EV market is called out by name, opening up a 25% import duty on nearly 30 EVs assembled in the U.S.
- Broader tariffs are set to go into effect on Tuesday with automobiles following shortly after.
The North American electric vehicle market is in trouble. As if U.S. President Donald Trump's tariffs on Canada and Mexico weren't enough to spark concern for consumers and automakers alike, Canada has fired back with its own duty fees, putting certain U.S.-built products—including electric vehicles—into another form of tariff hell.
Canada's decision to turn up the heat with a $155 billion tariff package was announced over the weekend after Trump officially announced levies on both Canadian and Mexican imports. Canada's response includes a 25% tariff on U.S.-made goods, officials said.
Update 7 p.m. EST: Canada and the U.S. have reached a tentative deal on tariffs that will postpone any enforcement for 30 days. Our original story follows below.
"These countermeasures have one goal: to protect and defend Canada’s interests, consumers, workers, and businesses," Canadian government officials said in a statement. A full list of these goods will be made available for a 21-day public comment period prior to implementation, officials said, but "will include products such as passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats."
The tariffs, which will become effective on Tuesday, have become fuel for Canadian Prime Minister Justin Trudeau, who announced "far-reaching" retaliatory tariffs against the U.S. following Trump's move. But while North America is playing tariff checkers, automakers are scrambling to learn how to play tariff chess for the billions of dollars of vehicles and auto parts crossing the border every single week.
In a speech, the prime minister singled out the auto industry as being uniquely affected by the trade war.
"As I have consistently said, tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing facilities," Trudeau said. "Unfortunately, the actions taken today by the White House split us apart instead of bringing us together."
Despite just a fraction of them qualifying for the U.S. federal EV tax credit, the list of EVs built in the U.S. isn't small. Vehicles imported from their U.S. assembly plant facing a 25% tariff would include the Acura ZDX, Cadillac Lyriq, Chevrolet Silverado EV, Ford F-150 Lightning, Hyundai Ioniq 5, Kia EV6, Kia EV9, Lucid Air, Lucid's upcoming Gravity SUV, Mercedes-Benz EQS, Rivian EVs, Volkswagen ID.4 and any Tesla models not made in China.
General Motors in particular is getting a one-two punch from the Canadian tariffs, as a number of parts and assembly for its high-margin trucks (plus its cars and SUVs) cross the U.S.-Canadian border. As a result, GM could be one of the hardest-hit automakers of the bunch.
Officially, Trump's new tariffs affect Canada, Mexico, and China. Goods from the two North American countries, which have been prime trading partners with the U.S. for decades (including under the United States-Mexico-Canada Agreement brokered under the first Trump administration), will be subjected to 25% tariffs. China will receive an additional 10% duty fee on goods, though that does little to dissuade the existing 100% EV-related tariff already in effect against the country.
Trudeau made good on the country's threats of firing back should the U.S. enact its tariffs. Canadian leaders warned the U.S. last week that it would not tolerate any sort of tariff without a fight—and that's exactly what it's doing.
Another Canadian official, Canada's Liberal Party leadership candidate Chrystia Freeland, suggested targeting Tesla specifically with tariffs due to Tesla CEO Elon Musk's support of Trump and new, unofficial role in dismantling various government agencies.
Yet auto industry experts and executives warn that carmakers can only eat so much of this cost before it gets passed on to the consumer. Even though these vehicles are assembled in the U.S., the auto supply chain is a global effort and North America has been largely treated as a single integrated market by most automakers over the last few decades.
So what does that mean for your next new car? Well, if any parts are imported into the U.S. through Canada or Mexico, they will contribute to the overall inflated bottom line at the dealership. For consumers, there's no short-term win here—unless the tariffs get called off. And even if they are, these political games will certainly reshape the way that automakers think about the future of the auto industry on both sides of the border.
