United States President Donald Trump has threatened to impose 50 per cent tariffs on Canadian cars, trucks and auto parts, escalating trade tensions between the US and Canada.

Trump said the new tariffs could take effect from January 1, 2027, unless Canada makes concessions in ongoing trade negotiations with Washington.

The proposed duties would represent a major escalation for Canada’s automotive industry, which is closely integrated with the US market and relies heavily on cross-border supply chains.

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Trump made the threat as his administration continues to push for changes to the trading relationship between the two countries. The US president has repeatedly used tariffs as a negotiating tool, arguing that higher import duties can encourage other countries to make concessions while protecting American businesses and workers.

Canada, however, has resisted Washington’s demands and warned that additional US tariffs could have serious consequences for its economy.

The automotive industry is particularly vulnerable because vehicles and their components frequently cross the US-Canada border several times during the manufacturing process. A single vehicle can contain parts produced in factories across both countries before it reaches consumers.

Canadian officials and industry representatives have warned that significant tariffs could therefore increase production costs, disrupt established supply chains and eventually push up vehicle prices.

The proposed measures could also affect American manufacturers with operations and suppliers in Canada.

The US and Canada have one of the world’s largest automotive trading relationships, with billions of dollars worth of vehicles and auto parts moving between the two countries every year.

Trump has previously imposed tariffs on Canadian imports, including steel and aluminium, while Ottawa has responded with retaliatory measures targeting American products.

The latest threat comes as the two countries negotiate their broader trade relationship under the United States-Mexico-Canada Agreement (USMCA).

The agreement, which replaced the North American Free Trade Agreement, provides preferential trading conditions between the three countries. However, Trump has repeatedly criticised aspects of the agreement and has pushed for changes that he says would benefit American workers and businesses.

Canada’s Prime Minister and other officials have continued to defend the country’s interests while seeking to avoid a wider trade confrontation with Washington.

Analysts have warned that a prolonged tariff dispute could have consequences beyond the automotive sector, potentially affecting investment, employment and consumer prices in both countries.

The uncertainty could also complicate planning for automakers that depend on predictable cross-border supply chains.

Trump’s latest threat adds to growing concerns among businesses about the future of North American trade. If implemented, the 50 per cent duties could significantly alter the economics of producing and selling vehicles across the US-Canada border.

The Canadian government is expected to continue negotiations with Washington in an effort to prevent the proposed tariffs from taking effect.

For now, however, the threat has added another layer of uncertainty to the already strained relationship between the two North American neighbours.