President Trump has vowed to raise tariffs on Canadian-built vehicles and auto parts to 50% starting Jan. 1, 2027, deepening a trade war that already imposed 50% tariffs on a range of Canadian goods over the weekend. Ford, GM and Stellantis shares fell, and U.S. home builders face higher costs after construction materials from Canada were hit with the same new tariffs.
Trump escalates tariffs on Canadian autos
Trump vowed a new 50% tariff on Canadian-built automobiles and parts starting Jan. 1, after imposing a separate set of 50% tariffs on Canada over the weekend. According to MarketWatch: "Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%." Canada has said it will roll out retaliatory levies starting Sept. 8.
The escalation followed the collapse of trade talks. A new U.S.-Canada trade deal failed to get finalized early Saturday, which would have cut U.S. tariffs on Canadian-built automobiles to 15% from 25%. Instead, automakers' Canadian factories now face a tariff increase in about four months, while vehicles built in the European Union, Japan and South Korea keep a 15% U.S. tariff rate.
Ford's Ontario bet caught in the crossfire
Ford is planning to start production of some of its F-Series Super Duty pickups at an assembly plant in Ontario later this year, part of a $3 billion investment announced in 2024 to expand Super Duty output by up to 100,000 vehicles across three North American plants. Ford shares fell 2.98%, on pace for their biggest one-day percentage loss since June 10.
GM already builds some trucks in Canada, including the Chevy Silverado, but Wall Street estimates only about 2% of GM's U.S. sales come from vehicles imported from Canada. GM shares fell 1.27%. Stellantis, which is enmeshed in a long-running dispute with Canada over investments at one of its plants, saw its shares drop 3.70%.
Home builders face costlier materials
American home builders are also viewed as losers from the new tensions. The Canadian goods facing new 50% U.S. tariffs as of early Saturday include cement, paints, plywood, medium-density fiberboard and particleboard. The National Association of Home Builders warned in July that tariff uncertainty could worsen housing affordability and urged an exemption for building materials.
Still, analysts say the broader economic effect on the U.S. could be modest, since the new tariffs cover only about 5% of total Canadian imports. The average U.S. effective tariff rate on Canada has risen to around 6% from about 3%, according to RBC analysts.
Source: MarketWatch
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