Canada's 25% tariff began collecting cars and trucks imported from the US early on Wednesday It's just the country's latest retaliation against tariffs imposed by President Trump on Canadian exports.
The approximately $5.7 billion in Canadian dollars of $8 billion per year, which are expected to generate, will also help bankrolls for businesses and workers who are under economic threat from the US.
With no obvious or immediate purpose in pushing Trump's tariffs, Canada is now focusing on ways to reduce the impact of unemployment, plant closures and bankruptcy that are likely to result from taxation. Other countries, including Spain and South Korea, have also announced various measures to mitigate the blow from tariffs.
In Canada, fallout from the tariffs of automobiles, the country's largest non-energy export to the US, came quickly.
Hours before the 25% US tariffs in Canada came into effect this month, Stellantis announced it had been closing for two weeks when its assembly plant in Windsor, Ontario evaluated its plans.
Flavio Volpe, president of the Canadian Auto Parts Manufacturers Association, estimates that up to 12,000 workers in Canadian Parts Plants and Canadian-owned Parts Plants in the United States are idling by Stellantis Shutdown.
But so far, Prime Minister Mark Carney has not laid out exactly how the money generated by Canada's response to US tariffs will be spent. In addition to the $5.7 billion from retaliatory car rates, Canada expects to generate $42 billion a year from a set of taxes imposed in March in response to previous tariffs on Canadian goods applied by Trump.
The nature of the economic crisis created by Trump challenges governments across Canada and around the world to see what financial support will work.
Rob Gillesau, a professor of economics at the University of Toronto, said many of the temporary measures used during the pandemic or past recession. It's unlikely that it will be effective if Trump doesn't do it quickly. Return to customs.
“Usually, you're hoping to get back to normal,” he said. “But this is a potentially permanent structural trade shock. I don't think there is necessarily a good reason to think that the companies here today will be the same companies tomorrow.”
Canada is hit by three separate US tariffs: taxation of goods outside the scope of the US, Canada and Mexico trade agreements, and collection of automobiles and auto parts, and aluminum and steel.
Some Canadian provinces are blocking measures they have used during the pandemic. Most notable, Ontario is home to the country's automotive industry and many of the broader industrial bases, including the steel sector.
On Monday, Ontario Premier Doug Ford said businesses could pay various taxes by the end of June by the months.
“We can't control President Trump. But we have full control over the future that we build for ourselves,” he said that he recently became something of a fixture for America's television news outlet because he opposed tariffs.
The government estimates that delaying the tax bill will allow businesses to hold about $9 billion in Canadian dollars than they expected.
“For margin companies, this could be important,” Professor Jillzoo said. “But given this drags me around, I don't think the impact on the survival of a company would make any particular sense.”
The state also said it is returning $2 billion in Canadian dollars to employers in the workplace accident insurance fund as a further boost.
Western Manitoba has announced the delay in payments for several tax-related businesses, while Quebec and New Brunswick are offering low-cost loans to businesses to adapt to a world where the US is no longer a financially viable market.
The federal government owned Canadian Business Development Bank, Special loan programs for businesses affected by customs duties. And another reply from the pandemic has changed unemployment insurance rules to help workers who are shortened due to US tariffs.
“We had never been in this situation before,” Professor Jillzoo said. “We're trying to identify which companies and sectors will be okay. That's really difficult,” he added.
