A 2025 Update on the Trump Tariffs
Nine months ago, I first covered the shockwaves sent through the Canadian economy when President Donald Trump initiated a sweeping 25% tariff on Canadian goods. I am giving an update on the state of the trade war through some typical cases that have come up in the news. These cases are not exhaustive, but they cover some key areas and issues that have arisen in the preceding nine months.
Donald Trump: The Soybean Precedent (ok bad joke)
Trump has used maximum-pressure tariffs on China as a negotiating lever, only to pull them back it backfired on American farmers and the costs became untenable. In the recent soybean case, the Trump backtracked and reduced significantly his tariffs on China after American farmers faced a total 100% loss of their largest export market.
Tariffs are a Trump bargaining chip: Trump’s tariffs are in many cases bargaining chips designed to be traded away, but they can remain in place long enough to cause permanent structural shifts in the economy.
Stellantis: Ontario’s Auto “Bombshell” and the Fed’s $1 billion in subsidies
Following the imposition of 25% U.S. tariffs on autos in April 2025, Stellantis announced it would move planned production of the Jeep Compass from its Brampton, Ontario plant to Belvidere, Illinois. The move leaves 3,000 Brampton workers on indefinite layoff.
- In December 2025, Industry Minister Mélanie Joly served Stellantis with a notice arguing the move violates the terms of over $1 billion in government subsidies intended to secure the plant’s future.
- Despite this federal pressure, Stellantis has cited the threat of ongoing tariffs as the primary drivers for shifting production to U.S. soil.
Potash in the West, autos in Ontario
The trade war has expanded into a “triangular” conflict involving China. After Canada followed the U.S. lead by imposing a 100% tariff on Chinese electric vehicles (EVs), China retaliated with its own 100% tariff on Canadian potash. Ouch, potash is a cornerstone of the Western Canadian economy.
PM Carney is now backed into a corner. If he reduces tariffs on Chinese EVs to save the Western potash industry, he risks a double-blow: triggering a massive retaliation strike from Trump, who demands a “United Front” against China, and outraging Ontario’s auto sector, which views those tariffs on China as its only protection against a flood of cheap Chinese EVs onto the market.
Doug Ford and the “Reagan Remedy“
Ontario Premier Doug Ford in an attempt to educate Americans on the downside of tariffs he released a video featuring the late US President Ronald Reagan.
Reagan is a figure Trump holds in high esteem and who viewed protectionism as a “poison” to the American economy. Ford’s message is clear: prosperous U.S.-Canada relations are built on the Reagan-era ideals of free trade and open borders, not the wall of tariffs.
Watch the Video:
https://www.youtube.com/shorts/xA5RC6Ag1VE
This ad led Trump to announce an end to any trade negotiations with Canada.
Algoma lays of Steel Workers after being given $500 million in government supports
Algoma Steel has recently issued layoff notices to 1,000 employees at its Sault Ste. Marie, Ontario, facility. These job cuts represent about 40% of the company’s workforce.
- Algoma CEO Michael Garcia stated that the 50% tariffs imposed by the U.S. effectively closed their largest export market.
- Before deciding on the layoffs, Algoma reported absorbing nearly $30 million in tariff costs monthly to maintain U.S. customer relationships.
- The announcement followed $500 million in government support ($400 million from the federal government and $100 million from Ontario) aimed at helping the company weather the trade war. HOWEVER, this taxpayer-funded aid did NOT come with ironclad job guarantees.
Latest Developments
Canadian steel producers have seen their business upended by Trump’s 50% steel tariff.
- To support the domestic industry, Canada is implementing a federal plan to subsidize 50% of the cost of shipping steel by rail to encourage interprovincial trade
- Federal government is restricting imports of foreign-made metal in an effort to shore up demand for the country’s steel mills
- But this is upsetting Western Canadian steel users. They warn that forcing them to buy from Eastern Canada steel mills at higher costs instead of importing at global prices will create shortages and drive up their manufacturing costs.
- The federal government is fighting U.S. protectionism by turning inward, creating a “forced marriage” between previously independent regional markets. This fundamentally alters the Canadian economy, highlighting deep-seated tensions between the Eastern Canada producers who win and the Western Canada buyers who lose.
The U.S. tariffs on Canadian goods are causing big, lasting problems for Canada’s economy.
Quick Update Dec 18 2025 From CBC news
Little by little, the costs of U.S. President Donald Trump’s tariffs are starting to show for American businesses and consumers.
News of the tariff impact is mounting, from the Detroit Three automakers announcing they’ll face extra costs this year totalling into the billions, to the stainless steel cookware manufacturer in Tennessee hit with a $75,000 US tariff bill on one shipment, right down to the coffee shops considering boosting the price of a cup because of tariffs on Brazil.
Until recently, companies have somewhat shielded U.S. consumers from the full effects of the tariffs, either by rushing supplies into the country ahead of Trump’s deadlines or absorbing the levies as a cost of doing business.
But with tariffs on imports from roughly 100 U.S. trading partners due to rise this week from their current baseline of 10 per cent, tariff-related costs are headed nowhere but up.
Alex Durante, senior economist of the Tax Foundation, a Washington-based policy and advocacy group, says the tariffs are hitting a broad range of U.S. businesses that rely on imports.
“I think the administration is going to have a really hard time trying to convince the American people that some of the price increases they’re seeing are because of other factors not related to the tariffs. I just don’t think most people are going to be fooled by that.”
I think the administration is going to have a really hard time trying to convince the American people that some of the price increases they’re seeing are because of other factors not related to the tariffs. I just don’t think most people are going to be fooled by that.
Oh oh! If Trump takes aim at the United States-Mexico-Canada Free Trade Agreement (USMCA) this could mean big trouble.
Although the agreement is meant to support free trade across North America, recent U.S. tariff decisions are undermining how it works and creating loads of trouble and stress for carmakers and workers not only in Canada but the US as well.
Why the Tariffs Are Angering U.S. Automakers
The most important point is that these tariffs are upsetting the big U.S. car manufacturers themselves — not just Canada. Under the new rules, cars made in Canada or Mexico face 25% import taxes on non-U.S. parts. At the same time, cars imported from Europe, Japan, or South Korea face lower tariffs of about 15%, even though many of those vehicles contain less American-made content.
Trump’s tariffs are making is to the U.S. companies like Ford Motor Company, General Motors, and Stellantis are being penalized for building cars inside North America. The tariffs make it cheaper to import cars from overseas than to manufacture them in Ontario, or even the United States. That is why these companies are now strongly defending the USMCA because it’s clearly in their own financial interest.
Why the USMCA Matters for Canada and Ontario
For Canada, especially Ontario, the USMCA is essential. Auto parts cross the border many times before a car is finished. Without this agreement, production costs would rise, factories would become less competitive, and thousands of Ontario manufacturing jobs would be at risk.
Bottom Line
The article shows that current tariffs are hurting everyone — including U.S. automakers — and that the USMCA remains the backbone of the Canadian and Ontario auto economy.
