Canada has officially responded to US President Donald Trump’s newly implemented 25% tariff on auto imports, with Prime Minister Mark Carney announcing reciprocal tariffs on vehicles imported from the United States.

Carney, speaking overnight, confirmed that he had warned Trump of Canada’s retaliation during a phone call last week.

“We take these measures reluctantly,” Carney said. “And we take them in ways that are intended to cause maximum impact in the United States and minimum impact in Canada.”

Despite matching the 25% tariff on vehicles, Canada will not impose duties on auto parts, a strategic decision to protect the deeply integrated North American supply chain. Auto parts often cross the Canada-US border multiple times before final assembly in plants across Ontario and Michigan.

The effects of the trade dispute are already being felt in Canada. Stellantis announced a two-week shutdown at its Windsor, Ontario assembly plant, impacting 3,600 workers. More disruptions are expected, according to Unifor Local 444 President James Stewart.

Canada’s auto sector is the country’s second-largest export industry, directly employing 125,000 workers and supporting nearly half a million more in related fields. To mitigate the economic fallout, Carney unveiled a C$2 billion (NZ$2.4 billion) strategic response fund aimed at protecting Canadian auto jobs.

Canada Braces for More Tariffs

The escalating trade tensions come after Trump previously slapped 25% tariffs on Canadian steel and aluminum. Carney warned that further US tariffs are expected on pharmaceuticals, lumber, and semiconductors.

“Given the prospective damage to their own people, the American administration should eventually change course,” Carney stated. “Although their policy will hurt American families, until that pain becomes impossible to ignore, I do not believe they will change direction.”

Carney, a former central banker in both Canada and the UK, called Trump’s trade policies “unjustified, unwarranted, and misguided.”

Canada’s Ongoing Retaliatory Measures

Carney confirmed that Canada’s C$30 billion (NZ$36.6 billion) in initial retaliatory tariffs—imposed in response to previous US trade actions—remain in place. These duties target a broad range of American goods, including: Orange juice, Peanut butter, Coffee, Appliances, Footwear, Cosmetics, Motorcycles, Pulp and paper products.

Amid the intensifying trade war, Carney suspended his election campaign to return to Ottawa and address the crisis.

With neither side backing down, trade experts warn that this dispute could worsen before any resolution is reached. As tariffs begin to bite, both US and Canadian consumers and businesses will likely face rising costs and economic uncertainty.

For now, Canada has drawn its line in the sand—and the North American auto industry hangs in the balance.