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Recent pacts with Britain, Europe and Japan mean that autos exported from those countries and regions face lower U.S. tariffs than Canadian vehicles do.
July 29, 2025, 5:06 p.m. ET
For decades, Canadians have been, by a wide margin, the world’s largest buyers of cars and trucks made in the United States. In most years, four out of every 10 vehicles that roll out of Canadian dealerships were shipped from American factories.
But being the most important overseas market for America’s vehicle industry has not insulated Canada’s own auto industry from President Trump’s move to unravel the global trading system. On Friday, Mr. Trump threatened to impose a new 35 percent tariff on Canada unless the two countries struck a deal.
But even before then, Mr. Trump’s recent trade deals with Japan, Britain and the European Union meant that their auto exports would now be entering the United States at tariff rates lower than that on Canadian cars and trucks.
Though the details of the three trade deals still have to be worked out, Britain has agreed to a 10 percent tariff, while Europe and Japan will pay 15 percent. Canada’s tariff rate stands at 25 percent.
“This is going to lead to the long-term uncompetitiveness of Canadian manufacturing,” said David Adams, the president of the Global Automakers of Canada, a trade group. “The longer it goes on, the more likely it is that Trump is going to get exactly what he wants: the dissolution of the auto manufacturing base in Canada.”
Prime Minister Mark Carney said in June that his goal was to reach a deal that would effectively eliminate all U.S. tariffs on Canada — a return to the terms of the trade agreement the country, along with Mexico and the United States, signed during Mr. Trump’s first term in office.
