Bloomberg Surveillance · Tuesday, August 25, 2026
President Trump has vowed to double automobile tariffs on Canadian vehicles and parts next year, escalating the trade dispute between the two nations. Former Trump White House trade official Kate Kaloukwitz believes this is genuine news and a significant setback for the U.S.-Canada relationship, potentially impacting the USMCA review. While the tariffs currently affect about 5% of bilateral trade, Canada has pledged to retaliate dollar-for-dollar.
“If President Trump escalates, Canada needs to be ready to do the same. Everything needs to be on the table. We need to use Canada's many points of leverage to create maximum impact, targeting deep red states and making sure that America's economy feels the pain.”
“This marks a considerable setback for the U.S.-Canada relationship and creates further uncertainty for the USMCA review.”
“The tariffs that the United States has imposed cover roughly 5% of bilateral trade. So, we're talking about a relatively small amount of trade. The Canadian Prime Minister, of course, has said he will hit back dollar for dollar. So, we can expect Canadian tariffs to hit $ 20 billion of U.S. Trade.”