On the Dash:
- President Trump plans to raise Canadian auto tariffs to 50% starting Jan. 1, 2027, doubling the current rate.
- Toyota and Honda, which build most of Canada’s vehicles, face the largest tariff exposure.
- The proposal follows collapsed U.S.-Canada trade talks, leaving four months before it takes effect.
President Donald Trump said tariffs on Canadian-built cars, trucks, auto parts and steel will rise to 50% starting Jan. 1, 2027, in an Aug. 24 post on Truth Social. The increase would double the existing 25% tariff the U.S. already imposes on non-U.S. content in Canadian-built vehicles under Section 232 of the Trade Expansion Act.
Toyota and Honda build the majority of vehicles manufactured in Canada, including the Toyota RAV4 and Honda CR-V, two of the best-selling SUVs in the U.S. Both models are exported from Canada to American dealers, putting the two automakers squarely in the path of the new tariff.
The proposal follows the collapse of separate U.S.-Canada trade talks last week, which triggered a 50% U.S. tariff on about $20 billion in Canadian goods and Canada’s matching retaliatory tariffs, set to take effect Sept. 8. Trump has framed the broader tariff push as a response to what the administration calls discriminatory Canadian trade practices, including tariffs and quotas that limit U.S. vehicle exports to Canada.
The higher auto tariff would add another layer of cost to a supply chain that already crosses the U.S.-Canada border multiple times during vehicle production. That pressure could ripple into pricing, sourcing and inventory planning for dealers on both sides of the border, particularly as automakers weigh whether to shift more production to the U.S.
Trump declined to renew the USMCA trade pact on July 1, leaving it subject to annual reviews even as talks continue between the U.S., Canada and Mexico. Uncertainty around that renewal has already factored into automaker investment decisions across the region.
The Jan. 1, 2027, deadline is still four months away, and Trump has adjusted tariff deadlines before, leaving room for a resolution before the increase takes effect.
