Canadian Prime Minister Mark Carney said that he would respond with unspecified trade actions if US President Donald Trump imposes new auto tariffs that have expanded a global trade war and hammered stocks.
Mr Trump last night unveiled a 25% tariff on imported vehicles, expanding a global trade war and prompting criticism and threats of retaliation from affected US allies.
Mr Carney said he had not yet determined what actions Canada might take if the US president follows through with his plan.
The Canadian leader said he would respond next week, when the auto tariffs and a separate set of reciprocal tariffs on US trading partners are due to take effect.
"We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada," Mr Carney told a news conference.
European countries have threatened retaliation as well.
The tariffs could add thousands of dollars to the cost of an average vehicle in the United States, contradicting Mr Trump's campaign promise to lower consumer prices.
Ferrari announced price hikes of up to 10% for cars sold in the United States, and other automakers also warned they might raise prices as well.
Dealers raised fears of job losses. The tariffs are a sucker punch for some of the United States most important allies and would come atop other trade penalties Mr Trump has already put in place.
Mexico, Japan, South Korea, Canada and Germany are the biggest suppliers of automotive imports to the United States that were worth $474 billion (€439 billion) in 2024.
Mr Carney said Canada would transform its economy to become less dependent on its southern neighbor, which has long been a close ally and important trading partner.
"We will need to reduce our reliance on the United States," he said at the press conference.
With billions of euros wiped from German auto shares, officials in Europe's biggest economy called for a tough response.
"The US has chosen a path at whose end lies only losers, since tariffs and isolation hurt prosperity for everyone," German Chancellor Olaf Scholz said.
In neighboring France, which is hosting a Ukraine summit without the US, Finance Minister Eric Lombard called Mr Trump's plan "very bad news," and said the only solution was for the EU to raise its own tariffs.
Britain, which has struggled to expand its economy, was scrambling to secure an exemption but also threatened to review subsidies given to electric vehicle maker Tesla, which is headed by one of Mr Trump's top advisers Elon Musk.
Canada froze rebate payments for the electric car maker.
The company, which faces declining sales, increased competition and a political backlash, is less exposed to Mr Trump's tariffs than its rivals, but the Tesla CEO said on X that the impact is "still significant."
Tesla shares rose, as did US EV makers Rivian Automotive and Lucid Group, whose supply chains are likewise largely US-based. Most other auto stocks tumbled.
JP Morgan said the tariffs would raise new car prices by $4,000 to $5,300.
Trump threatens further escalation
Sources said the Trump administration also has paused contributions to the World Trade Organisation, further hobbling the global trade watchdog as it yanks support for international institutions it sees at odds with its "America First" agenda.
China's foreign ministry said the US approach undermines the multilateral trade system and was "not conducive to solving its own problems.
"With shares falling, Japanese Prime Minister Shigeru Ishiba said Tokyo will put "all options on the table" and South Korea said it would put in place an emergency response by April.
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Since taking office on 20 January, Mr Trump has announced and delayed tariffs on Canada and Mexico for what he alleges is their role in allowing the opioid fentanyl into the US; set import taxes on goods from China for the same reason; launched hefty duties on imports of steel and aluminium; and has repeatedly touted his plans to announce global reciprocal tariffs on 2 April.
Mr Trump sees tariffs as a tool to raise revenue to offset his promised tax cuts and to revive a long-declining US industrial base.
Many trade experts, however, expect prices to initially rise and demand to fall, hurting a global auto industry that is already reeling from uncertainty caused by Mr Trump's rapid-fire tariff threats and occasional reversals.
The US president said he might hit the EU and Canada with larger tariffs if they teamed up to retaliate.
"If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had," he said in a post on Truth Social.
TikTok deal
Mr Trump said he would be willing to reduce tariffs on China to get a deal done with TikTok's Chinese parent ByteDance to sell the short video app used by 170 million Americans.
ByteDance has an 5 April deadline to find a non-Chinese buyer for TikTok or face a US ban on national security grounds that was supposed to have taken effect in January under a 2024 law.
The law is the result of concern in the US that TikTok's ownership by ByteDance makes it beholden to the Chinese government and that Beijing could use the app to conduct influence operations against the United States and collect data on Americans.
Mr Trump said he was willing to extend the April deadline if an agreement over the social media app was not reached.
He acknowledged the role China will play to get any deal done, including giving its approval, saying "maybe I'll give them a little reduction in tariffs or something to get it done," Mr Trump told reporters.
His comment suggests the sale of TikTok's is a priority for his administration and important enough to use tariffs as a bargaining chip with Beijing.
In February and earlier this month, Mr Trump added levies totaling 20% to existing tariffs on all imports from China.
Getting China to agree to any deal to give up control of a business worth tens of billions of dollars has always been the biggest sticking point to getting any agreement finalised. Mr Trump has used tariffs as a bargaining chip in the TikTok negotiations in the past.
