In a dramatic shift in Canada’s foreign policy, Prime Minister Mark Carney on Thursday declared that the long-standing economic and security relationship between Canada and the United States has ended, responding to US President Donald Trump’s announcement of new auto tariffs that could severely impact Canada’s economy, Politico reported.
“The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation, is over,” Carney stated on Parliament Hill after breaking from the federal campaign trail in response to Trump’s latest threats.
Trump announced Wednesday that his administration would impose a 25 percent tariff on auto imports from Canada, the European Union, Japan, and South Korea. He also threatened to introduce additional tariffs targeting major US trading partners.
In reaction, Carney said that he would speak with Trump in the coming days but made clear that any discussion must respect Canada’s sovereignty. “We must fundamentally reimagine our economy. We will need to ensure that Canada can succeed in a drastically different world,” he said.
Carney convened his Cabinet’s committee on Canada-US relations upon returning to Ottawa. Canada has indicated it is ready to retaliate but has not revealed specific countermeasures. “We are facing a comprehensive and broad negotiation,” Carney said, adding that he would not disclose Canada’s response strategy prematurely.
Flavio Volpe, president of the Automotive Parts Manufacturers Association of Canada, warned that if the tariffs proceed, both countries’ auto industries would be paralysed within a week. “One day, two days, three days where you hope the president shows you mercy. You’re a publicly traded company whose share price is taking a beating, and you have a fiduciary obligation to shareholders,” Volpe told Politico.
Ontario Premier Doug Ford spoke with US Commerce Secretary Howard Lutnick on Wednesday about the potential impact on his province.
According to Ford, Lutnick explained that tariffs on vehicles from Canada and Mexico would be adjusted based on US content. For example, if a car built in Mexico contains 50 percent American parts, the tariff rate would be reduced to 12.5 percent instead of the full 25 percent.
“He’s reassuring us that there’ll be no plant closures. My response was Ronald Reagan’s response: Trust but verify,” Ford said. “If they’re opening or closing, it’s going to be up to the CEOs.”
Ford also confirmed that he spoke with Carney and that both agreed Canada would fully retaliate if necessary. Ottawa has previously stated that it could impose up to CAD 155 billion in counter-tariffs on US goods.
Trump responded on Truth Social early Thursday, warning that if Canada and the EU coordinated against the tariffs, the US would introduce even harsher trade measures. “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!” Trump wrote.
Carney dismissed Trump’s threat, asserting that Canada would act in its own national interest. “What is clear is that we as Canadians have agency, we have power. We are masters in our own home,” he said. “We can control our destiny.”
Since becoming Liberal Party leader on March 9, Carney has not spoken directly with Trump. While members of his Cabinet may travel to Washington, he stated that he has no immediate plans to do so. Volpe suggested that a phone call would be preferable to an in-person visit.
“I don’t think it’s in anybody’s interest in Canada to get Zelenskyy-ed,” Volpe said, referring to how the Biden administration has handled Ukraine’s leader. “They’ve shown that they lack the class to treat an ally whose people are dying with any respect. I imagine that we’d be risking that as well.”
He also advised that Canada remain patient and allow the economic fallout in the US to take effect. “What if we go to the other side and everything shuts down, and 950,000 US auto workers are sitting around? That’s ugly, but that’s also hopeful,” Volpe said. “That’s a whole group that people are going to have to hear from, and they’re not going to talk about the price of eggs. They’re going to talk about how to make rent.”
Lana Payne, president of Unifor, Canada’s largest private-sector union, called on the government to protect auto workers and warned the US against trying to shift manufacturing southward while maintaining access to Canada’s market. “If you think you can shift production, factories, mills and reinvest in the United States out of Canada and think that you’re going to have open access to our market, you need to think again,” Payne said.
Canadian premiers have also voiced concerns. “Here’s the thing: Donald Trump is trying to create uncertainty all over the world, in Canada included. And he’s trying to make people panic so that he can get a deal that takes advantage of us,” said Manitoba Premier Wab Kinew.
Quebec Premier Francois Legault called for an immediate renegotiation of the United States-Canada-Mexico Agreement (USMCA) but acknowledged that might not be realistic under Trump. “It has to happen as soon as possible because right now, we cannot start negotiating piece by piece a new agreement,” Legault said. “But we have to be realistic. Is Mr. Trump open to this negotiation?”
Mexico, Canada, and South Korea currently benefit from duty-free access to the US auto market under trade agreements that Trump renegotiated during his first term. However, the new tariffs could significantly disrupt North America’s integrated auto supply chains, Politico reported.
Mayors from Canada, Mexico, and the US are set to meet in Washington on Friday for a trade summit, where they will advocate for tariff relief. Candace Laing, president and CEO of the Canadian Chamber of Commerce, criticised the tariffs as a reckless economic move that could cost thousands of jobs in both countries. She noted that the Ontario-Michigan supply chain alone produces nearly a quarter of North America’s vehicles and warned that Trump’s tariffs would significantly increase vehicle costs. “Under Trump’s tariffs, the cost of a pickup truck would rise by USD 8,000,” she said.
According to data from the US Commerce Department, the United States imported 214 billion worth of passenger cars in 2024. The US government has stated that the new tariffs will take effect on April 3, just one week away.
(With inputs from ANI)
