Canada has announced plans to impose a 25% tax on US-made vehicles that do not comply with the North American Free Trade Agreement (NAFTA). The decision follows the US’s implementation of tariffs on Canadian steel, aluminum, and vehicles, which Canada has criticized as unjustified and unwarranted.
Mark Carney, Canada’s prime minister, stated that the tariffs imposed by the United States were misguided and would have wide-reaching consequences both in Canada and globally. While the US did not impose new tariffs on Canada or Mexico in its recent trade actions, it has continued to levy 25% taxes on certain Canadian imports, including automobiles.
Carney clarified that the new tax would specifically apply to US vehicles not adhering to the continental free trade deal, and would not affect auto parts or vehicles containing Mexican content. This move is part of Canada’s broader response to US trade policies that have disrupted global markets, with many countries reevaluating their trade relations with the US.
Amid a shifting global trade landscape, Carney pointed to discussions with leaders from Mexico and Europe as part of Canada’s efforts to strengthen more balanced trade agreements. He stressed that Canada’s response would prioritize the protection of domestic workers and businesses, with revenue from the new taxes intended to support affected sectors.
The announcement comes during a federal election campaign, with Carney’s Liberal party seeing a boost in support due to the ongoing trade tensions. Polls suggest the party is poised to secure a majority government if current trends hold.
In contrast, Conservative leader Pierre Poilievre has pledged to renegotiate the trade agreement if his party is elected, aiming to end what he described as “tariff madness” and remove federal taxes on automotive purchases to reduce costs for Canadian families.
Experts warn that the automotive tariffs could have a significant impact on Ontario’s economy, which is home to the country’s largest manufacturing sector. A plant in Windsor has already announced a temporary shutdown due to the tariffs, affecting over 3,500 workers. Ontario Premier Doug Ford expressed support for negotiating with the US from a position of strength, noting that while Canada had avoided new tariffs in the recent US announcement, the continued levies on Canadian goods were unacceptable.
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