In response to U.S. President Donald Trump's newly introduced "reciprocal" tariffs, Canada announced Thursday that it would impose a 25% tariff on certain American auto imports. Prime Minister Mark Carney stated that the tariff would apply to all vehicles imported from the U.S. that do not comply with the Canada-United States-Mexico Agreement (CUSMA), according to AFP. CUSMA, short for the Canada-United States-Mexico Agreement, is the current free trade pact governing North American trade.

The latest action is a direct response to tariffs imposed by Donald Trump, signalling rising trade friction between the two countries.

Carney described Canada’s response as strategic and measured, aimed at limiting disruptions. However, the Canadian government has not yet specified how many vehicles might be affected by Ottawa's new tariffs. The decision follows the U.S. announcement of a 25% tariff on imported automobiles under Donald Trump’s leadership. The U.S. government claims the move will strengthen domestic manufacturing and generate $100 billion annually. While introducing the tariffs, Trump expressed confidence that the policy would encourage the opening of new factories in the U.S. and reduce reliance on what he termed a “ridiculous” supply chain involving the U.S., Canada, and Mexico.

Trump has repeatedly emphasised that imposing tariffs on auto imports is a crucial part of his economic strategy. He believes these additional costs will encourage more manufacturing within the United States and help narrow the budget deficit.

 During a Wednesday White House Rose Garden event, U.S. President Donald Trump announced the imposition of reciprocal tariffs on several countries. The tariffs varied between 10% and 49%, with India facing a 26% tariff, China 34%, Vietnam 46%, the UK 10%, Cambodia 49%, and South Korea 25%.

Referring to the April 2 announcement as 'Liberation Day,' Trump stated, “Taxpayers have been ripped off for more than 50 years. But it is not going to happen anymore.”