Fitch: Trump's tariffs on Canadian cars may affect about $45 billion worth of imported goods

The Zhitong Finance App learned that the rating agency Fitch estimated on Monday that US President Trump's implementation of his latest measures to raise tariffs on automobiles and auto parts imported from Canada may affect products worth about 45 billion US dollars.

After weeks of trade negotiations between the US and Canada broke down last Friday, Trump announced on Monday that import tariffs on cars, trucks and auto parts made in Canada will be raised to 50% from January 1, 2027. This move means that the current tariff rate of up to 25% on imported Canadian automobiles will double, and trade tension between the US and Canada will once again clearly escalate.

Previously, Canada had been trying to reduce the tariffs imposed by the US on Canadian automobiles and other products by reaching a new trade agreement with the US. Negotiations between the two sides were once very close to completion, but they finally broke down last Friday night. According to GlobalData data, about 861,000 cars manufactured in Canada in 2025 will be sold to the US. The Canadian automobile manufacturing industry is highly integrated with the North American supply chain, and further increases in US tariffs may put greater cost pressure on automobile manufacturers with production bases in Canada.

It is worth noting that at present, the Canadian automobile manufacturing industry is no longer mainly dominated by Detroit's traditional automobile giants. In recent years, Toyota and Honda's automobile production in Canada has expanded significantly. According to industry organization data representing non-Detroit automakers, Toyota and Honda together accounted for 76.5% of Canadian automobile production in 2025. The number of cars produced by Toyota and Honda each in Canada exceeds the combined production volume of the three companies Ford (F.US), General Motors (GM.US), and Stellantis NV (STLA.US) in Canada. This means that if the US eventually fully imposes a 50% import tariff on Canadian cars, not only will the North American supply chain of traditional American automakers be affected, but Japanese automakers with huge production bases in Canada, such as Toyota and Honda, may also face a significant impact.

Olu Sonola, head of US economics at Fitch Ratings, said, “Assuming the same framework of the current “Section 232” tariffs and the import scale is at a similar level, we estimate that the additional tariff burden could reach 4.6 billion to 5 billion US dollars. Imposing a 50% tariff on automobiles will raise the actual US tariff rate on Canadian goods from about 5.3% to 6.5%, which is more than double the 3.1% rate before the “Section 338” tariff was implemented. This will mean a dramatic escalation in the tariff pressure facing Canada.”

Olu Sonola said that Trump announced that the new tariffs will be implemented on January 1, 2027, which left some time for negotiations between the two sides, “but the uncertainty itself alone will put pressure on the highly integrated North American automotive supply chain.” If both sides take retaliatory measures, it may further exacerbate the losses of the US and Canada.

However, he believes that “Canada may bear most of the consequences of this shock, as reflected in weakening production, investment, and employment.” “If implemented, these tariffs could force a major and economically disruptive restructuring of the Canadian automotive industry and have a lasting impact on its manufacturing base and the wider economy,” he said.

According to Fitch, automobiles and parts supplied by Canada account for about 13% of total US automobile and parts imports, second only to Mexico's 37%. The most imported commodities the US imports from Canada are oil and gas, accounting for about 30% of total US imports from this northern neighbor; followed by automobiles and parts, accounting for 12%.

Furthermore, prior to the implementation of the new tariffs on Canadian goods, the Yale University Budget Laboratory estimated that as of August 11, 2026, the average statutory tariff rate of the US on goods from all countries was 11.0%. It is expected that several scheduled tariff increases will push this tax rate to 11.8% by the end of this year.