US-Canada trade negotiations have broken down! Trump announced that Canadian car tariffs will be raised to 50% from 2027

The Zhitong Finance App learned that US President Trump announced on Monday that import tariffs on cars, trucks, and auto parts made in Canada will be raised to 50% from January 1, 2027, after several weeks of trade negotiations between the US and Canada broke down last Friday. This move means that the current tariff rate of up to 25% on imported Canadian automobiles will double, and trade tension between the US and Canada will once again clearly escalate.

Trump posted on social media on the same day that Canada has been “taking advantage of the US” on trade issues for many years and accusing Canada's tariff policy of harming the interests of American farmers.

“It's not sustainable, and it won't continue,” he said. He announced that from January 1, 2027, tariffs on all automobiles, large and small trucks, auto parts, and steel products from Canada will be raised to 50%.

Currently, the maximum tariff rate levied by the US on Canadian automobile imports is 25%, so if Trump's latest measures are officially implemented, the relevant tariffs will double. US tariffs on Canadian steel products have now reached 50%.

Trump announced an increase in tariffs this time, and it is only a few days until negotiations on a new trade agreement between the US and Canada broke down.

Previously, Canada had been trying to reduce the tariffs imposed by the US on Canadian automobiles and other products by reaching a new trade agreement with the US. Negotiations between the two sides were once very close to completion, but they finally broke down last Friday night.

In his latest post, Trump once again urged companies to move production to the US. He said that if the company “produces in the US,” it can enjoy “zero tariffs.”

At the same time, he adopted stronger language on Canada, saying that the US “doesn't need Canada, Canada needs America,” and said that in the future, Canada will no longer be treated in the same way as it was in the past. He also claimed that 95% of Canada's business is linked to the US. However, the original text did not further explain whether this ratio specifically refers to Canadian exports, trade, or other economic activity.

The Canadian car market is significantly smaller than the US. In 2025, fewer than 2 million new cars were sold in Canada, while sales of new cars in the US exceeded 16 million units during the same period.

According to GlobalData data, about 861,000 cars manufactured in Canada in 2025 will be sold to the US. The original report also stated that this amount is equivalent to 5.4% of Canadian automobile production, but there is a clear discrepancy between the two figures in terms of presentation, so the exact ratio still needs to be further confirmed.

The Canadian automobile manufacturing industry is highly integrated with the North American supply chain, and further increases in US tariffs may put greater cost pressure on automobile manufacturers with production bases in Canada.

It is worth noting that at present, the Canadian automobile manufacturing industry is no longer mainly dominated by Detroit's traditional automobile giants. In recent years, Toyota and Honda's automobile production in Canada has expanded significantly.

According to industry organization data representing non-Detroit automakers, Toyota and Honda together accounted for 76.5% of Canadian automobile production in 2025. The number of cars produced by Toyota and Honda each in Canada exceeds the combined production volume of the three companies Ford (F.US), General Motors (GM.US), and Stellantis NV (STLA.US) in Canada.

This means that if the US eventually fully imposes a 50% import tariff on Canadian cars, not only will the North American supply chain of traditional American automakers be affected, but Japanese automakers with huge production bases in Canada, such as Toyota and Honda, may also face a significant impact.

Overall, trade relations between the US and Canada quickly turned tense again after agreement negotiations broke down. Trump set January 1, 2027 as the effective date for the new tariffs. While continuing to put pressure on Canada, he also once again sent a clear signal to car manufacturers that expanding domestic production in the US will be an important way to avoid high import tariffs.