Canada Responds with Tariff on U.S. Automobile Imports, Effective April 9
Trade Update • April 8, 2025
ffective April 9, 2025, the Government of Canada is imposing 25 per cent tariffs on non-CUSMA-compliant U.S.-made vehicles, and on the non-Canadian and non-Mexican content of CUSMA-compliant U.S.-made vehicles.
Targeting the Auto Sector
View the full list of vehicle products from the United States subject to 25% tariffs.
Canada’s new countermeasures zero in on the U.S. auto sector—a cornerstone of the bilateral trade relationship and a major employer in both countries. The new Canadian tariffs include:
A 25% tariff on fully assembled vehicles imported from the United States that do not comply with CUSMA (Canada-United States-Mexico Agreement) rules.
A 25% tariff on non-Canadian and non-Mexican content in CUSMA-compliant vehicles imported from the U.S.
These tariffs only apply to goods originating from the U.S., which shall be considered as those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations.
Canada will also begin work on a long-term framework to incentivize domestic auto production and investment, a move that signals a strategic pivot to bolster economic resilience and reduce reliance on foreign supply chains.
Crucially, the government pledged that every dollar raised from these tariffs will be redirected to direct support for Canadian auto workers—a clear message that those on the front lines of the trade war will not be left behind.
Broader Support for Workers and Businesses
announcement builds on a suite of earlier measures introduced by Ottawa since the onset of the trade dispute. These include:
Temporary waivers on Employment Insurance (EI) waiting periods.
Suspension of severance rules to speed up EI access.
Adjustments to regional EI eligibility thresholds.
Deferrals on corporate income taxes and GST/HST payments, providing up to $40 billion in liquidity.
A new business financing facility and expanded funding for regional development agencies.
The support package reflects the government’s strategy to manage the broader economic fallout while reinforcing confidence among Canadian workers and businesses.
A Relationship Under Strain
Canada and the U.S. maintain one of the world’s most deeply interconnected trading partnerships, with over US$2.5 billion in goods and services crossing the border each day. However, relations have been tested in recent weeks as Washington has moved aggressively to reshape the trade balance through tariffs.
Since March 4, the U.S. has implemented:
25% tariffs on Canadian goods, (not including USMCA eligible goods);
10% tariffs on Canadian energy and potash exports, (not including USMCA eligible goods) and;
The latest tariffs on Canadian automobiles—effective April 3—are expected to have significant ripple effects across both economies. The U.S. has also signaled its intention to impose 25% tariffs on certain auto parts (effective May 3), though some exclusions may apply depending on U.S. content levels.
Canada’s Escalating Response
In retaliation, Canada has already introduced:
25% tariffs on US$30 billion worth of U.S. imports (March 13),
A public consultation on additional retaliatory measures,
Reciprocal tariffs on U.S. steel, aluminum, and other goods totalling $29.8 billion (April 2).
Today’s actions represent the next phase in Ottawa’s escalating response, aimed at compelling the U.S. to reverse its protectionist course.
As tensions rise, all eyes will be on upcoming diplomatic engagements—including a scheduled meeting between Prime Minister Carney and President Donald J. Trump—as Canada navigates one of the most turbulent periods in its modern trade history.
The information presented is general in nature, and is not intended to constitute legal advice with respect to any event or occurrence, and may not be considered as such. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information. Due to the complexity of Customs Regulations, valuations are based on information currently available and should not be considered binding, we recommend obtaining National Customs Rulings in areas of uncertainty.
How GHY Can Help?
GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.
By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.
Contact Us Today! gts@ghy.com, or call +1 (800) 667-0771.
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