Canadian Auto Parts Spared US Tariffs Under Free Trade Agreement

The Ford Assembly Plant in Oakville, Ontario, in a file photo. The Canadian Press/Chris Young

Canadian vehicle parts that are covered under the free trade agreement with the United States will not be subject to any tariffs, according to a new directive from U.S. Customs.

In March, President Donald Trump announced 25 percent tariffs for vehicle parts that were imported from other countries. Their implementation had been delayed until May 3.

However, a new directive from U.S. Customs and Border Protection released on May 1 indicates zero tariffs for parts that fall under the Canada-United States-Mexico Agreement (CUSMA).

Parts that do not fall under CUSMA will see a 25 percent tariff imposed, the directive said.

It also indicates the tariff exemption does not cover automobile knock-down kits or parts compilations.

Sharing a link to the directive, President of the Canadian Automotive Parts Manufacturers’ Association Flavio Volpe said, “It looks like the White House agrees that tariffs on [Canadian] parts would shut down [U.S.] auto.”

The zero tariff directive comes just days after Trump announced a reprieve for the auto industry by signing an executive order to prevent overlapping levies for the same auto part. The order will apply retroactively to imports entering the country on or after March 4.

Automakers will also be given a rebate this year and next year if they finish assembling their vehicles in the United States.

Canada’s auto industry has already been bracing for the impact of U.S. tariffs on manufacturing in the country, particularly in Ontario.

Stellantis announced it would be pausing production at its Windsor plant for two weeks beginning April 7. It produces vehicles including the Chrysler Pacifica at the facility.

The U.S. administration has said its tariffs are part of a plan to increase manufacturing in America.

When announcing reciprocal tariffs on other countries, Trump said they were a “declaration of economic independence” from what he called unfair trade practices by other countries. Canada was not included in those new tariffs.

Other tariffs remain in place, including 25 percent on steel and aluminum imported into the United States, 10 percent levies on energy imports, as well as the broad 25 percent tariff on goods from Canada in relation to illegal immigration and fentanyl trafficking.

Canada has responded to the U.S. tariffs by imposing retaliatory tariffs on about $60 billion worth of goods imported from south of the border.

Trump and Prime Minister Mark Carney are expected to hold an in-person meeting following Carney’s election victory on April 28. No date for the meeting has been released.

Noé Chartier, Matthew Horwood, Andrew Moran, and Tom Ozimek contributed to this article.