Investing.com -- Canadian Prime Minister Mark Carney gave a speech on Thursday following the implementation of U.S. President Donald Trump's reciprocal tariffs and an additional 25% auto tariff on Canada. The recently-elected Prime Minister declared that Canada is implementing 25% tariffs on all vehicles and non-Canadian vehicle content imported from the U.S. that are not compliant with the CUSMA (USMCA) trade pact.
Trump said on Wednesday that the U.S. will impose reciprocal tariffs of 10% on all imported goods, with higher reciprocal rates for some nations that will be half of the rate they charge on U.S. exports. The 10% tariffs will go into effect on April 5, while the higher "half" tariffs will begin on April 9.
The U.S. administration also confirmed previously announced 25% tariffs on imported vehicles and auto parts. Additionally, Trump implemented a 25% tariff on goods from Mexico and Canada that are not compliant with the USMCA deal. There is already a 25% tariff on steel and aluminum in place.
In answering, Carney said, "We are responding today with carefully calibrated and targeted counter-tariffs." He confirmed that Trump has been aware of this after their call last week.
He then announced that Canada will match the U.S.' approach with 25% tariffs on all vehicles imported from the U.S. that are not in compliance with the USMCA deal. Carney went on to verify that auto parts will not be affected by these tariffs, and that no tariffs would affect vehicles or vehicle content from Mexico.
Carney alleged that total funds raised from Canada's tariffs could reach CAD$8 billion, and all funds will go to the autoworkers and companies affected. This excludes a CAD$2 billion fund announced last week to bolster Canada's auto sector, which would be applied if Carney and the Liberal Party win the upcoming April 28 election.
The Prime Minister confirmed that the tariffs will remain in effect, though they are imposed reluctantly. He underscored that goods chosen are meant to have maximum impact on the U.S. and minimal impact on Canada.
"As President Trump and I agreed last week, he and the Prime Minister of Canada will sit down immediately following the election to find areas of common ground and agreement in a new economic and security partnership," he said regarding the future of U.S. and Canada's trade relations.
The U.S.' exemption of Mexico and Canada from those reciprocal tariffs, as well as the USMCA goods exemption, have been seen by many to be a positive break for the two countries. Carney acknowledged this, calling the sparing of Canada "progress."
However, Carney pointed out that tariffs will still impose serious problems for Canadian workers and businesses, calling them "unjustified, unwarranted, and misguided." He addressed the already-yielded consequences, pointing to a Windsor assembly plant that told UNIFOR union workers that it would be shutting down for at least the next two weeks, costing some 3,600 employees work.
In his repudiation of the U.S.' trade policy, Carney stated that there was a 97% drop in fentanyl seizures on the U.S.-Canada border in January compared to December. Fentanyl and other drug-trafficking have been cited by Trump as one of his chief objections with Canada.
Furthermore, Carney looked to the U.S. Senate to bolster his claims, as U.S. Senators Chuck Grassley and Maria Cantwell introduced a bill to curtail the President's authority to impose tariffs unilaterally.
Carney reiterated previous statements criticizing the U.S. for violating the USMCA agreement with its tariffs, saying that Canada is fighting in courts, filing disputes, and has approached the World Trade Organization in efforts to halt the tariffs.
The Prime Minister spoke of the previous relationship between the U.S. and Canada in automotive trade, citing the Canada-United States Auto Pact, an agreement that ran from 1965 to 2001. The pact removed duties on most automotive parts traded between the two countries. Carney expressed that the same trade symbolized under the pact is "over," unless a new approach is found.
Continuing, Carney conceded that despite the U.S. not targeting Canada in yesterday's announcements, the tariffs will "rupture the global economy and adversely affect global economic growth." He stated that the world's trade, previously anchored under the U.S., is also "over," saying, "The 80-year period where the United States embraced the mantle of global economic leadership is over."
He further emphasized the importance of Canada's individual growth through expanding trade elsewhere, building the economy, and protecting their sovereignty. Carney contended that Canada is ready to bear a leadership role in the world, saying, "If the United States does not want to lead, Canada will."
To conclude, the campaigning Prime Minister implored Canadians to "draw strength" from each other, calling for economic unification across the 13 Canadian provinces.
Regarding the future of the U.S., Carney expects Trump to change his course, pointing to the pain that this potential trade war may cause on Americans and saying, "Until that pain becomes impossible to ignore, I do not believe they will change direction," but, "They should eventually change course."
