By David Shepardson and Daphne Psaledakis
WASHINGTON, Aug 24 (Reuters) – President Donald Trump sought to boost pressure on Canada on Monday, warning that U.S. tariffs on all cars, trucks and automotive parts from the U.S.’ northern neighbor would be increased to 50% starting January 1 after trade talks collapsed over the weekend.
The trade deal on the table would have cut the top-line tariff rate on Canadian cars and light-duty trucks from 25% to 15% and the tariffs on aluminum and steel from 50% to 25% but the deal collapsed on Friday over a number of points of contention including whether the U.S. tariff relief would have applied to medium or heavy-duty trucks.
“Build in the U.S. and there are ZERO TARIFFS. Canada will be treated like a State no longer!” Trump wrote.
“On Trade, and in other ways, also, they are among the worst Nations in the World to deal with. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US!” Trump said.
Canada has consistently been one of the top two U.S. trading partners and last year, U.S. goods and services trade with Canada totaled $872.3 billion, down 4.6%.
Canada exported over three-quarters of its goods to the U.S. and imported almost half of its goods from the U.S.
U.S. auto production is heavily integrated with Canada and Mexico and the tariffs — depending on the specifics — could have drastic impacts on American production.
Flavio Volpe, the president of Canada’s Automotive Parts Manufacturers’ Association, said, “A threatened US tariff on Canadian auto parts will be paid by (the) US auto assembly. Without those specific parts, auto assembly throughout the U.S. would halt.”
The White House did not immediately respond to a request for comment seeking more details on the threatened tariffs. Representatives for the Canadian government also did not immediately respond to a request for comment.
Canada will impose tariffs on some U.S. goods starting September 8 in retaliation for 50% levies ordered by Trump on $20 billion in Canadian products.
“You’re at war when you get attacked. We got attacked,” Canadian Prime Minister Mark Carney said on Saturday when asked whether Canada was engaged in a trade war.
Many automakers have announced or are considering plans to scale back Canadian auto production and the trade standoff has led to a 22% reduction in Canadian imports of U.S. vehicles.
Major automakers did not immediately comment on Trump’s announcement.
But auto executives, speaking to Reuters on the condition of anonymity, raised skepticism about Trump’s threat, noting that the president has previously announced large tariffs that never materialized and that any tariff of that size would likely spark a massive Canadian retaliation.
They also noted that January was months after November’s midterm elections and that Trump’s threat could be aimed at restarting talks.
In January, Trump said the U.S. would decertify Bombardier Global Express business jets and threatened 50% import tariffs on all aircraft made in Canada until the country’s regulator certified a number of planes produced by U.S. rival Gulfstream.
Neither occurred but the following month Canada certified several Gulfstream planes.
(Reporting by Katharine Jackson, Daphne Psaledakis and David Shepardson; Editing by Susan Heavey, Chizu Nomiyama and Mark Porter)
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