Doug Rogers

President Trump’s newly announced 25% tariff on the auto industry has sent shockwaves through Canada. The tariffs kick in on April 3 and target all foreign-made cars and auto parts coming into the U.S. Trump claims it’s a big step toward boosting domestic manufacturing, but for Canada the impact is significant.

What’s Covered?

The tariff applies to a wide range of automotive products, including passenger cars, light trucks, and key components like engines, transmissions, and electrical systems. But there’s an interesting exception—parts that meet the criteria of the United States-Mexico-Canada Agreement (USMCA) are exempt, meaning they can still be traded duty-free if they’re U.S.-made. So, vehicles assembled in Canada or Mexico will only be hit with tariffs on any non-U.S. part in that vehicle.

The Cross-Border Puzzle is one of the most challenging parts of this policy, with the disruption it could cause to North America’s highly interconnected supply chain. Auto parts often cross borders multiple times during production. Take a transmission, for example. It might be made in Canada, sent to the U.S. for assembly, and then brought back to Canada for installation. Under the new rules, every border crossing could add extra costs, essentially “double-tariffing” these goods. This could cause serious headaches for automakers and throw production schedules out of whack.

What Does It Mean for Consumers?

 The ripple effect of these tariffs will likely hit consumers’ wallets. Experts predict that the price of a new car in Canada could increase by as much as $12,000 for certain models.

Bigger Picture: The Trump administration says these tariffs will encourage automakers to move production back to the U.S., but Canadian Prime Minister Mark Carney has called the tariffs a “direct attack” on Canadian workers, and many industry insiders are worried about job losses and shrinking competitiveness. On top of that, the policy could escalate trade tensions, with Canada and other countries considering their own retaliatory measures. And in my opinion, we should retaliate, hitting those goods that aren’t imperative to us, rather a ‘nice to have’ and hitting red states as we’ve done already. The idea being to punish the US for the tariffs and minimizing the effect on our economy. Make no mistake though, this will have an effect on our economy and wallets.

April 3^rd is right around the corner and well before our election, so it will be interesting to see how this all unfolds, and the effect it has.