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A Temporary Truce, but More Battles Ahead
One trade war may be winding down, but others are just beginning. U.S. President Donald Trump has eased off on tariffs against Canada after sending shockwaves through markets, factories, and borders. But the pause is brief.
Next week, new steel and aluminum tariffs take effect. Then, by April, Trump is threatening additional tariffs on multiple countries. While his administration initially framed these moves as an effort to curb fentanyl imports, recent statements and private discussions suggest a different target: the North American auto industry.
A Direct Hit to Canada’s Auto Sector
For Canada, the stakes are high. Auto manufacturing supports hundreds of thousands of jobs, and most vehicles produced in Canada are exported to the U.S. But in closed-door discussions, Trump’s team has been pressuring automakers to scale back their presence in Canada and Mexico in exchange for permanent tariff relief—so far, without success.
Publicly, the message is just as clear. Trump’s press secretary, Karoline Leavitt, urged automakers to “shift production here,” while Commerce Secretary Howard Lutnick questioned why U.S. auto jobs were in Canada. Trump himself told major automakers that there would be no exemptions from future tariffs.
“I told them, ‘This was a short-term deal,’” Trump said while signing a recent order. “‘Don’t come back to me after April 2. I don’t want to hear from you after April 2.’”
A Two-Phase Tariff Threat
Trump’s next moves involve two phases.
First, a 25% tariff on steel and aluminum takes effect next week, potentially driving up vehicle prices unless exemptions are granted.
Then, starting as early as April 2, Trump plans broader tariffs aimed at countries accused of unfair trade practices. Canada is clearly in his sights, especially as he prepares for a fast-tracked renegotiation of the Canada-U.S.-Mexico Agreement (CUSMA).
Beyond autos, Trump has repeatedly criticized Canada’s dairy sector, banking regulations, and tax policies. His frustration was evident in a heated, profanity-laced phone call with Prime Minister Justin Trudeau.
Economic Fallout and Business Uncertainty
Trump insists stock market turbulence hasn’t influenced his decisions. “I’m not even looking at the market,” he said.
But businesses are already feeling the impact. Cross-border customs brokers report companies being hit with unexpected five- and six-figure tariff bills. Some shipments were delayed past Tuesday’s midnight deadline, forcing companies to pay tariffs they hadn’t anticipated. Others discovered they owed new fees for returning repaired equipment to the U.S.
Rather than risk sudden losses, many companies have held back shipments, hoping Trump will reverse course. In response, Canadian exports to the U.S. surged from November to January, a trend analysts link to businesses rushing to move goods before tariffs take hold.
A High-Stakes Gamble for Canada
Trump’s partial tariff rollback offers some relief, but uncertainty lingers. The Canadian Chamber of Commerce warns that ongoing threats are undermining investment, consumer confidence, and market stability.
“This is not a moment to celebrate,” said Chamber VP Matthew Holmes. “The economy is not a toy to play with.”
For Canada, the biggest challenge is yet to come. Next week, steel workers may take the hit. Soon after, the auto industry could face an even bigger blow.
The economy isn’t a game—but businesses and workers are being forced to play, round after round.
