Ottawa says automakers that keep building in Canada will get a tariff exemption

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WASHINGTON — Automobile companies that continue to manufacture vehicles in Canada will get an exemption from Ottawa’s retaliatory tariffs as U.S. President Donald Trump attempts to upend the North American industry with steep import duties.

Federal Finance Minister François-Philippe Champagne announced Tuesday that auto manufacturers will be allowed to import a certain number of U.S.-assembled vehicles — ones that comply with the Canada-U.S.-Mexico Agreement on trade — free of the countermeasure tariffs Ottawa imposed in response to Trump’s levies.

The number of tariff-free vehicles a company is permitted to import will drop if there are reductions in Canadian production or investment.

“The North American automobile sector is the most integrated industrial manufacturing sector in the world, particularly the Canadian-U.S. auto sector,” Prime Minister Mark Carney said Tuesday. “And so President Trump’s tariffs are an attempt in some degree to pull apart that integration and the benefits that come from that integration.”

Carney made the comment in response to a media question while campaigning in the Montreal suburb of Saint-Eustache, Que.

Trump imposed 25 per cent tariffs on all imports of automobiles to the United States on April 3 but ordered a partial carve-out for vehicles built under the continental trade pact, known as CUSMA. In response, Ottawa put similar tariffs on U.S.-made vehicles bound for Canada.

Duties on auto part imports to the U.S. were set to take effect no later than May 3; Carney said he does not believe those tariffs will go ahead now. The Liberal leader said he has been in touch with automaker CEOs in Canada and around the globe.

Conservative Leader Pierre Poilievre said earlier Tuesday at a campaign stop in Montreal that “Trump deserves nothing but condemnation for the unfair targeting of Canada.”

NDP Leader Jagmeet Singh said at a separate campaign stop in Montreal that Canada needs to fight to get Trump’s tariffs removed and “make sure that we can strengthen our automobile sector.”

Trump’s duties have rattled the North American automobile sector. Vehicles cross the Canada-U.S. border multiple times before they’re finished and experts say the tariffs will drive up prices.

The Canadian and American auto industries officially integrated with the 1965 Auto Pact trade deal.

Mexico became part of the continental industry in the 1990s with the North American Free Trade Agreement. That was replaced during Trump’s first administration by CUSMA, which boosted protections for the automobile sector.

Honda Canada denied reports of possible shifts in Canadian production Tuesday, saying its facility in Alliston, Ont. will operate at full capacity for the foreseeable future and no changes are currently being considered.

The Detroit Three — Ford, General Motors and Stellantis — have been lobbying the Trump administration for months. Trump suggested Monday another pause on automobile tariffs could be coming to give companies “a little bit of time” to move capabilities to the U.S.

White House Press Secretary Karoline Leavitt didn’t provide any details when asked on Tuesday about the president’s automobile comments but said Trump “has flexibility.”

Leavitt was also asked about Trump’s shifting tone toward Canada. She said the president maintains his position.

“The United States has been subsidizing Canada’s national defence and he believes Canadians would benefit greatly from becoming the 51st state,” Leavitt said.

On Tuesday, Champagne also announced relief for Canadian businesses affected by the trade dispute to give them time to adjust their supply chains.

Ottawa says it intends to provide a temporary six-month tariff holiday for goods imported from the U.S. that are used in Canadian manufacturing, processing and food and beverage packaging. The temporary exemption also will apply to goods used to support public health, health care, public safety and national security.

Champagne said the large enterprise tariff loan facility, announced in March, is now accepting applications.

Global markets have been in turmoil since Trump launched, then partially paused, his “reciprocal” tariffs earlier this month. A 10 per cent import tariff remains in place for most countries, as well as specific duties on sectors like aluminum, steel and automobiles.

Trump slapped 145 per cent tariffs on Chinese imports and Beijing responded with a 125 per cent retaliatory duty on U.S. products.

A new poll suggests Canadians are expressing high levels of concern about the recent stock market volatility linked to U.S. tariffs — and are more worried than Americans about how duties will affect their finances.

The Leger poll sampled 1,630 Canadian adults and 1,007 American adults from April 11 to April 13. Because the poll was conducted online, it can’t be assigned a margin of error.

It suggests 78 per cent of Canadian respondents were worried about stock market volatility. Most Canadian respondents, 87 per cent, said they believed the new tariffs will affect their personal finances, compared to 78 per cent of Americans.

Leger conducts tariff polls weekly and says that more Canadians and Americans reported seeing an increase in consumer prices in the past week.

Article by Kelly Geraldine Malone.

With files from Kyle Duggan in Ottawa and Catherine Morrison in Saint-Eustache, Que.