The United Auto Workers applauded President Donald Trump’s 25% tariffs on vehicles and parts on Thursday, while Canada’s Prime Minister Mark Carney called the tax a “direct attack” on his nation, but he’ll need details before taking retaliatory measures.
Canadian Prime Minister Mark Carney Canadian Prime Minister Mark Carney said Wednesday that Trump’s auto tariffs are a “direct attack” on his country and that the trade war is hurting Americans, noting that American consumer confidence is at a multi-year low.
A day earlier, Trump said he was placing 25% tariffs on auto imports and, to underscore his intention, he stated, “This is permanent.”
“This is a very direct attack,” Carney responded Thursday. “We will defend our workers. We will defend our companies. We will defend our country.”
Carney said he needs to see the details of Trump’s executive order before taking retaliatory measures. He called it unjustified and said he will leave the election campaign to go to Ottawa on Thursday to chair his special Cabinet committee on U.S. relations.
Trump previously granted a one-month exemption on his stiff new tariffs on imports from Mexico and Canada for U.S. automakers.
Autos are Canada’s second largest export, and Carney noted it employs 125,000 Canadians directly and almost another 500,000 in related industries. Carney says it is appropriate that he and Trump speak on the phone. The two have not spoken since Carney was sworn in March 14.
The U.S. cities most vulnerable to a trade war with Canada turn out to largely be in the states that helped return Trump to the White House — a sign of the possible political risk he’s taking with his tariff plans.
A new analysis released Thursday by the Canadian Chamber of Commerce detailed the areas most dependent on exports to Canada, with San Antonio and Detroit topping the list of 41 U.S. metro areas. The findings show that the United States’ 25% tariffs on Canada and Canada’s retaliations could inflict meaningful damage in key states for U.S. politics.
Mexico President Claudia Sheinbaum said Thursday that Mexico does not want to be drawn into taking positions with each new U.S. tariff. She cited Trump’s taxes on aluminum and steel as well as his new ones on imported automobiles and auto parts.
“There shouldn’t be any tariffs, that is the essence of the commercial treaty” the first Trump administration signed with Mexico and Canada, she said.
Mexico’s Economy Secretary Marcelo Ebrard said his team had more than half a dozen meetings with top Trump officials, but once Trump was moving ahead, they shifted gears to seek preferential treatment.
Now he said both sides are discussing a deal where automobiles exported from Mexico would not face the full 25% tariff, but rather would be taxed based on where their components came from.
Meanwhile, the White House sought to highlight the support of United Auto Workers union president Shawn Fain, who had previously endorsed the 2024 Democratic presidential nominee Kamala Harris.
Press secretary Karoline Leavitt said Fain “wasn’t the greatest fan” of Trump, but still has “applauded the president for this move.”
A day earlier, Fain said of Trump’s tariffs announcement, “Ending the race to the bottom in the auto industry starts with fixing our broken trade deals, and the Trump administration has made history with today’s actions.”
Meanwhile, European automakers, already struggling with tepid economic growth at home and rising competition from China, decried the U.S. import tax on cars as a heavy burden that will punish consumers and companies alike on both sides of the Atlantic.
The new import tax “will hurt global automakers and US manufacturing at the same time,” the European Automobile Manufacturers’ association said in a statement.
The stakes are enormous for BMW, Volkswagen, Mercedes-Benz, Volvo, Stellantis and their vast network of suppliers, as well as the entire European economy.
The U.S. is the biggest export destination for the European auto industry and in 2023, European automakers exported 56 billion euros worth of vehicles and parts to the U.S.. Europe’s auto industry supports 13.8 million jobs, or 6.1% of total EU employment.
Europe’s carmakers already face a shrunken domestic market and new competition from cheaper Chinese electric vehicles. Any trouble in the auto industry would weigh on European economy that did not grow at all in the last quarter of 2024 and just 0.9% for the entire year.
The most exposed are German and Italian carmakers since 24% of German and 30% of Italian non-EU exports go to the U.S.. Germany is home to major automakers such as Volkswagen, Mercedes-Benz and BMW.
U.S. carmakers are less exposed to possible retaliation because they export only 2% of their production to the EU. Still, shares of Detroit’s Ford and General Motors tumbled sharply before the opening bell in the U.S. Thursday because the U.S. industry relies heavily on cross-board trade by suppliers.
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