Trump Threatens 100% Tariffs on Canadian Cars Over Digital Tax
US President Donald Trump has warned he will impose a 100% tariff on all cars imported from Canada if the country proceeds with its planned digital services tax. This major threat escalates long-standing trade tensions between the two neighbours and puts a key Canadian industry at risk.
Key Details of the Digital Tax Dispute
The confrontation began after Canada announced plans to impose a digital services tax on large tech companies, set to take effect in 2024. The tax would apply to firms with global revenues over €750 million (USD 890 million) and Canadian revenues over CAD 20 million (USD 15.6 million), directly affecting US giants like Google, Facebook, and Amazon.
Trump responded sharply with a statement: “If Canada proceeds with its digital services tax, I will impose a 100 per cent tariff on all cars imported from Canada.”
Stakes for Canada’s Economy
The threat targets Canada’s vital auto industry. The US is Canada’s largest trading partner, and about 85% of Canadian car exports go south of the border. An industry already struggling from the COVID-19 pandemic would face severe additional pressure from such tariffs.
- The Canadian auto sector is a major economic pillar.
- Tariffs would significantly impact Canada’s trade balance and GDP.
- Business groups warn of job losses and supply chain disruptions.
Official Reactions and Defence
Canadian leaders swiftly condemned the threat. Prime Minister Justin Trudeau called it “completely unacceptable,” vowing to “stand up for Canadian workers and Canadian interests.”
Finance Minister Chrystia Freeland defended the tax, stating, “We are committed to ensuring that all companies, including digital giants, pay their fair share of tax in Canada.”
Business chambers on both sides expressed deep concern. The US Chamber of Commerce urged the administration to resolve the issue through dialogue, warning tariffs would hurt both economies.
Broader Trade Context
This dispute adds to existing friction over dairy, lumber, and the renegotiation of NAFTA. Trump has previously threatened tariffs against France over a similar digital tax. With global economic recovery fragile, new trade barriers could slow growth for both nations.
Canada is now reviewing its position, with a decision expected in the coming weeks. The outcome will critically shape the future of US-Canada trade relations.
