On April 2, 2025, President Trump issued an Executive Order imposing “reciprocal” tariffs on almost all its trading partners, and tariffs on all automobile imports.
New U.S. tariff measures
As expected, the announced reciprocal tariffs are country-specific, built on a global baseline of 10%. (For the time being, Canada and Mexico, which are subject to a specific tariff regime, will not be subject to the baseline.)
The country-specific tariffs were expected to be a blend of a number of different elements. In the end, the US administration took a different tack; starting with the presumption that the quantum of a trading partner’s trade deficit must necessarily arise from a combination of tariffs and non-tariff barriers, it used this trade deficit to arrive at a “reciprocal” tariff.
The reciprocal tariffs are not compounded with sectoral tariffs on steel and aluminum or automobiles (already imposed under other proclamations and executive orders).
In particular, as of April 3, 2025 the already announced 25% tariff on imported automobiles and parts came into effect.
Of note, for automobile imports eligible for preferential tariff treatment under CUSMA, the automobile tariffs will only be applied to the value of non-US content in the imported good once a process for ascertaining the non-US content is established.
The tariffs will apply to imports of passenger vehicles, light trucks and a wide range of key components (ranging from tires and engines to automotive computers).
Canadian response and impacts
In response to the entry into effect of the automobile tariffs, Prime Minister Carney announced the imposition of a 25% retaliatory tariff against all automobile imports from the US. Similar to the US measures, tariffs will only be applied to the non-Canadian content of CUSMA-compliant automobile imports.
The Canadian tariffs will notably not apply to imports of auto parts.
In his announcement, Prime Minister Carney emphasized Canada’s readiness to explore trade partnerships with countries other than the US.
What comes next?
BLG continues to monitor as this situation develops. If you have specific questions, please contact our International Trade Group.
The automotive tariff battle between the United States and Canada: A new phase
