The trade relationship between the United States (“US”) and Canada is facing renewed tensions as President Trump has indicated the US will impose a blanket 25 percent tariff on all Canadian goods on or soon after his inauguration on January 20, 2025.
In response, Canadian government officials have signaled Canada will respond with retaliatory tariffs and other possible countermeasures such as export taxes. Consequently, it is important to understand how retaliatory import tariffs and export taxes have worked in the past, and how they might work in the future.
On June 24, 2024, the Canadian government announced the launch of a 30-day consultation period starting July 2, 2024, to explore potential policy responses aimed at protecting Canada’s auto workers and its growing electric vehicle (“EV”) industry against unfair trade practices from China.
Background
Canada’s automotive sector currently produces over 1.5 million vehicles annually, equivalent to one vehicle every 21 seconds. This sector supports nearly 550,000 indirect jobs, contributed $18 billion to Canada’s GDP in 2023, and ranks among the nation’s largest industries.
