Kathmandu— Former United States President Donald Trump has announced plans to impose significant new tariffs on imports from Canada, targeting automobiles and automotive parts. The proposed tariffs, set at 50 percent, would double existing duties on Canadian cars and trucks starting January 1st, with additional levies also applying to auto parts. This action follows the collapse of trade negotiations between the two countries last week, prompting Trump to seek increased pressure on Ottawa.

Escalating Trade Tensions

Trump detailed his plans via his social media platform, Truth Social, stating that Canada would be “treated like a State no longer!” and asserting the U.S. does not need Canada while Canada needs the U.S. He also reiterated a call for manufacturers to build within the United States to avoid tariffs altogether. The announcement builds on previously imposed 50 percent tariffs on steel, though it remains unclear what impact doubling that tariff would have given its current level. In addition to the existing duties, Trump proposed a 50 percent tariff on auto parts, which had not previously been subject to such levies.

Economic Interdependence at Stake

Canada is consistently one of the United States’ top two trading partners; in 2023, goods and services trade between the countries totaled $872.3 billion, a decrease of 4.6 percent from the prior year. Canada exports over three-quarters of its goods to the U.S., while importing nearly half of its own goods from the United States. This deep economic integration means that disruptions to trade could have significant consequences for both economies.

Industry Concerns and Skepticism

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, warned that a U.S. tariff on Canadian auto parts would ultimately be paid by American auto assembly plants, potentially halting production across the country if those specific parts become unavailable. Despite Trump's announcement, some auto executives speaking anonymously to Reuters expressed skepticism about whether the tariffs will actually materialize, citing past instances of announced tariffs that were never implemented. They also suggested the threat could be a tactic to restart trade negotiations and noted the timing – months before November’s midterm elections.

Lack of Immediate Response

Neither the White House nor representatives for the Canadian government immediately responded to requests for comment regarding the threatened tariffs. Major automakers have also remained silent on the announcement, though industry insiders have voiced concerns about potential disruptions to production and supply chains.

The proposed tariffs remain a threat contingent upon Trump’s political future, with analysts suggesting they may be intended as leverage in ongoing trade negotiations. The lack of immediate responses from both governments leaves the situation uncertain.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.