Canada Levies Counter Automobile Tariffs on the U.S.

In addition to the tariffs, Canada is establishing a framework to boost domestic production and investment while providing more support for workers and businesses in the auto industry.

Summary

• A 25% tariff now applies to non-CUSMA-compliant, fully assembled vehicles imported from the U.S.
• A 25% tariff now applies to non-Canadian and non-Mexican content of CUSMA-compliant, fully assembled vehicles imported from the U.S.
• A new framework will be introduced to boost automobile production and investment in Canada.
• Tariff revenues will be directed to support Canadian auto workers.
• Worker and business support will be provided, including easier EI access, tax deferrals, and new financing facilities.

Canadian Prime Minister Mark Carney has announced that, effective April 3, 2025, Canada will impose 25% automobile tariffs on imported vehicles from the U.S.  

This move is in response to the American 25% tariff on Canadian automobiles that took effect on April 3, 2025, in addition to a 25% tariff on auto parts set to take effect no later than May 3, 2025.

Canada is introducing these tariffs to protect its auto industry and support workers and businesses affected by recent trade developments.

These tariffs are part of a broader strategy and countermeasures to maintain stability in Canada’s auto sector, which supports over 500,000 jobs nationwide. 

Details of the Canadian automobile tariffs

Canada’s new automobile tariffs include: 

• A 25% tariff on fully assembled vehicles imported from the United States that are not compliant with the Canada-United States-Mexico Agreement (CUSMA).
• A 25% tariff on the non-Canadian and non-Mexican content of CUSMA-compliant fully assembled vehicles imported from the United States.

Moreover, the Canadian government will develop a national framework to incentivize auto production and investment within the country.

Revenue generated from the new automobile tariffs will be directed entirely to programs supporting Canadian auto workers. 

Providing additional support to Canadian businesses

In addition to the automobile tariffs, Canada has announced further support measures for workers and businesses. 

These include a temporary waiver of the one-week Employment Insurance (EI) waiting period, a six-month suspension of severance pay rules so workers don’t have to exhaust severance pay before collecting EI, and an increase in regional unemployment rate percentages to facilitate access to EI.

Moreover, Canadian businesses can defer corporate income tax payments and GST/HST remittances from April 2 to June 30, 2025, which will provide up to $40 billion in liquidity.

To further support Canadian businesses, a new financing facility and increased funding for regional development agencies will also be provided.

Previous countermeasures against U.S. import tariffs

Recently, Canada responded to the U.S. imposing tariffs on Canadian goods by introducing a suite of countermeasures—intended to pressure the U.S. to remove the tariffs.

These countermeasures included:

• Imposing a 25% tariff on approximately $30 billion worth of goods imported from the U.S., effective March 4, 2025.
• Initiating a public comment period on potential counter tariffs for additional imports from the U.S.
• Imposing, as of March 13, 2025, 25% reciprocal tariffs on goods totaling $29.8 billion. These apply to a list of steel products worth $12.6 billion, aluminum products worth $3 billion, and additional imported U.S. goods valued at $14.2 billion to match U.S. tariffs on steel and aluminum dollar-for-dollar.

Next steps for Canadian automobile importers

If you import vehicles from the United States, you will need to carefully assess the impact of the new tariffs on your operations to ensure compliance and avoid delays or additional costs. You can start by: 

• Reviewing your supply chains to verify the origin of imported vehicle components and finished products.
• Assessing potential cost impacts and exploring opportunities to adjust sourcing strategies.
• Working with a customs broker to classify your imports correctly and ensure proper documentation.

How Cole International can help

At Cole International, we provide customs and compliance consulting and customs brokerage services to help you navigate changing regulations and simplify importing goods into Canada.  

Please reach out to one of our trade professionals to discuss how to manage compliance, mitigate risks, and streamline your import processes.