Washington: US President Donald Trump has threatened to double tariffs on vehicles and automotive parts imported from Canada to 50 per cent from January 1, 2027, escalating an already bitter trade dispute between the two neighbouring countries.

"On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%," Trump said in a post on his Truth Social platform on Monday.

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The current US tariff on Canadian vehicles stands at 25 per cent on non-US content, while imported steel generally faces a 50 per cent duty.

Trump's latest announcement came days after the United States and Canada failed to reach an agreement to prevent new US tariffs on a range of Canadian goods. The additional 50 per cent duties took effect on Saturday.

Canada announces retaliatory tariffs

Canadian Prime Minister Mark Carney has announced retaliatory measures against US imports after rejecting what he described as a "bad deal".

The new Canadian tariffs will target US steel and dairy products, along with goods from sectors including:

  • Agricultural equipment

  • Pulp and paper

  • Electronics

The measures are scheduled to take effect on September 8.

Canada is heavily dependent on trade with the United States, which is its largest trading partner. Canadian exports to the US account for around 70 per cent of the country's total exports.

The escalating tariff dispute has already affected key Canadian industries, particularly the steel and automotive sectors.

Canada is also the United States' second-largest trading partner in goods so far this year, behind Mexico, according to US Census Bureau data.

'We don't need Canada'

Trump intensified his rhetoric on Monday, accusing Canada of having "ripped off" the United States for years.

"We don't need Canada, they need us," he said.

The Angus Reid Institute reported that three in four Canadians supported Carney's decision to walk away from the latest trade negotiations. However, around two in five respondents said they feared the dispute could affect their jobs.

The White House has accused Canada of discriminatory treatment of US alcohol, automotive and dairy products in connection with its trade measures.

Washington had delayed the implementation of the latest tariffs by three days last week as officials from both countries attempted to reach an agreement.

Trade talks end without a deal

Canadian negotiator Dominic LeBlanc and his team held lengthy discussions with US Trade Representative Jamieson Greer in Washington on Thursday and Friday.

However, the negotiations continued late into Friday without producing an agreement. Carney subsequently said he had decided to suspend trade talks with the United States.

The latest US duties affect about 5.5 per cent of Canadian goods entering the country, worth approximately $20 billion. The products covered range from hockey sticks to cement.

Greer told The New York Times that the Trump administration had offered to remove a 10 per cent tariff on Canadian softwood lumber and reduce the 25 per cent tariff on automobiles.

Washington was also prepared to lower steel tariffs from 50 per cent to 25 per cent for most Canadian steel imports, Greer said.

No further negotiations have yet been scheduled.

USMCA adds to trade tensions

The tariff dispute comes as Washington and Ottawa also face negotiations over the future of the United States-Mexico-Canada Agreement (USMCA).

Trump has indicated that he does not intend to renew the trade agreement in its current form.

His repeated suggestions that Canada could become the "51st state" of the United States have also fuelled tensions and angered many Canadians.