US-Canada Trade War Heats Up as Trump Threats to Hike Auto Tariffs - BBC News
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US-Canada trade war escalates as Trump threatens to hike auto tariffs
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Watch: "Absolutely ridiculous": Canadians react to new tariff tensions with the US
By
Nadine Yousif
Senior Canada reporter
Published
24 August 2026
Updated 1 hour ago
President Donald Trump has threatened to hike US tariffs on automobiles originating in Canada, as the trade war between the two neighbours continues to heat up.
Trump said on Monday that he will increase tariffs on Canadian cars and trucks, as well as auto parts, from 25% to 50% as of 1 January. This comes after US-Canada trade talks collapsed late last week, with each side accusing the other of making unreasonable last-minute demands.
Late on Monday, Canada officials announced a news conference for Tuesday where they would outline how the country would respond to the trade war and work to "protect and support Canadian workers and businesses during these challenging times." The news conference at 09:00 ET (14:00 BST) will include government leaders in business, finance, and economic development.
Earlier in the day, Prime Minister Mark Carney called Trump's latest levy threat unsurprising and accused the president of wanting to destroy Canada's auto industry. He added that Canada is ready to resume talks only if the US comes with the "right attitude."
The war of words followed several US and Canadian officials saying that talks were suspended with no set date to resume.
Canada walked away from trade negotiations late on Friday night, moments before a US-imposed deadline that would add a 50% levy on nearly $20bn (C$28bn; £14bn) of Canadian imports. The collapse in talks marked a significant change in tone from earlier in the week, when both sides appeared optimistic that a new US-Canada trade deal could be reached.
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Watch: Canada will negotiate if US has the "right attitude", says Mark Carney
Canadian officials have said the US introduced last-minute demands that were "unacceptable", including a clause limiting which countries Canada could sign trade deals with. US officials, meanwhile, said it was Canada that introduced last-minute changes.
"They wanted more," US Trade Representative Jamieson Greer said in an interview with CNBC on Monday.
The breakdown led to growing tensions as both sides publicly dug in their heels. On Monday, Trump's tariff threats to Canada's auto industry followed Carney declaring the country would counter his levies with reciprocal tariffs on US goods "dollar for dollar."
Carney announced funding of C$11bn ($7.95bn; £5.83bn) to build six icebreakers at a Quebec shipyard for the Canadian Coast Guard that will replace its medium and heavy ageing fleet. The icebreakers will be used to open winter shipping routes through Canada's northern and Atlantic waters.