Trump announces 50% tariffs on Canadian vehicles and steel starting January 1, 2027

U.S. President Donald Trump escalated trade tensions with his northern neighbor by announcing 50% tariffs on vehicles and steel imported from Canada, a measure that, according to El País, will take effect on January 1, 2027.

In response, the Canadian government retaliated with a series of countermeasures. According to La Tercera, Ottawa imposed tariffs of up to 50% on some 700 U.S. products, covering imports valued at roughly $20 billion, with rates in effect since September 8.

Imposing tariff barriers in a highly integrated relationship disrupts the supply chains of the automotive and manufacturing industries. According to BBC Mundo, although Canada sends about 70% of its exports to its southern neighbor, it has regulatory and economic tools to inflict cross-border damage on U.S. productive sectors.

To cushion the impact on the domestic economy, the Canadian executive added loans and subsidies totaling C$7.5 billion aimed at supporting companies and workers directly hit by the protectionist escalation, La Tercera reported.

Authorities and productive sectors in both countries will need to closely monitor the trend in bilateral trade flows and the sustainability of the fiscal compensation measures implemented by Ottawa to prevent a larger contraction in industrial employment.