Trump escalates Canada trade fight with 50% auto tariff threat

WASHINGTON, DC: US President Donald Trump on August 24 threatened to raise tariffs on all cars, trucks and automotive parts from Canada to 50 percent starting January 1, escalating pressure on the country after trade negotiations collapsed over the weekend. The trade deal under discussion would have reduced the top-line tariff on Canadian cars and light-duty trucks from 25 percent to 15 percent, and tariffs on aluminum and steel from 50 percent to 25 percent. However, the deal collapsed on August 21 over several points of contention, including whether US tariff relief would apply 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!" he added. Canada has consistently been one of the top two US trading partners. US goods and services trade with Canada totaled US$872.3 billion last year, down 4.6 percent. Canada exports more than three-quarters of its goods to the United States and imports almost half of its goods from the country. US 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, 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 provide further details about the threatened tariffs. Representatives for the Canadian government also did not immediately respond to a request for comment. Canada is set to impose tariffs on some US goods beginning September 8 in retaliation for 50 percent 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, while the trade standoff has led to a 22 percent reduction in Canadian imports of US vehicles. Major automakers did not immediately comment on Trump's announcement. Auto executives expressed skepticism about the threat, noting that Trump has previously announced large tariffs that did not materialize and that tariffs of that size would likely trigger massive Canadian retaliation. They also noted that January comes months after November's midterm elections and said Trump's threat could aim to restart talks. In January, Trump said the US would decertify Bombardier Global Express business jets and threatened 50 percent tariffs on all Canadian-made aircraft until Canada's regulator certified several planes made by US rival Gulfstream. Neither occurred, but Canada certified several Gulfstream planes the following month.