On April 9, Canada implemented retaliatory tariffs of up to 25% on fully assembled U.S.-made passenger vehicles, in response to U.S. auto tariffs imposed by President Trump a week earlier. These tariffs aim to pressure Washington to lift its levies and primarily target vehicles not compliant with the USMCA, although even USMCA-compliant vehicles are subject to a 21.25% default tariff rate based on assumed non-Canadian/Mexican parts content. Importers can claim higher regional content to reduce duties, subject to verification. Unlike the U.S. tariffs, Canada’s surtax excludes auto parts, but it is still expected to increase vehicle prices and impact automakers. The move follows two previous rounds of countertariffs and underscores Canada’s stance against what it deems unfair trade practices. Proceeds—estimated at $8 billion annually—will support affected autoworkers and companies, and a new incentive framework for Canadian vehicle production is in development.