The 25 percent tariff Canada began collecting on cars and trucks imported from the United States early Wednesday is not just the country’s latest act of retaliation against tariffs imposed by President Trump on Canadian exports.
The estimated 8 billion Canadian dollars a year, about $5.7 billion, that those levies are expected to generate will also bankroll help for companies and workers now under economic threat from the United States.
With no obvious or immediate end in sight to Mr. Trump’s tariffs push, Canada is now turning its attention on how to lessen the impact of the job losses, plant closings and bankruptcies that the levies are likely to cause. Other countries, including Spain and South Korea, have also announced various measures to try to cushion the blow from tariffs.
In Canada, the fallout from the tariffs on autos, the country’s largest export to the United States aside from energy, came quickly.
Hours before a 25 percent U.S. tariff on autos made in Canada went into effect this month, Stellantis announced that its assembly plant in Windsor, Ontario, was closing for two weeks as it assessed its plans.
Flavio Volpe, the president of the Automotive Parts Manufacturers’ Association of Canada, estimates that up to 12,000 workers at parts plants in Canada and at Canadian-owned parts plants in the United States have been idled by the Stellantis shutdown.
So far, however, Prime Minister Mark Carney has not laid out exactly how the money generated by Canada’s response to U.S. tariffs will be spent. Besides the $5.7 billion from the retaliatory auto tariffs, Canada also expects to generate $42 billion annually from a set of levies it imposed in March in response to earlier tariffs on Canadian goods applied by Mr. Trump.
The nature of the economic crisis created by Mr. Trump is also challenging governments in Canada and around the world to figure out what kind of financial support will work.
Rob Gillezeau, an economics professor at the University of Toronto, said many of the temporary measures used during the pandemic or during past recessions are unlikely to be effective if Mr. Trump does not quickly back down on tariffs.
“Usually you expect a return to normal,” he said. “But this is, potentially, a permanent structural trade shock. I don’t think that there’s necessarily good reason to think that the firms here today are going to be the same firms here tomorrow.”
Canada has been hit with three separate U.S. tariffs: levies on autos and auto parts, aluminum and steel, and a third tariff on goods that are outside the scope of the trade agreement among the United States, Canada and Mexico.
Some Canadian provinces have dusted off measures they used during the pandemic, most notably Ontario, which is home to the country’s auto industry and much of its broader industrial base, including the steel sector.
On Monday, Doug Ford, Ontario’s premier, said that businesses would be able to defer paying a variety of taxes due at the end of June by several months.
“We can’t control President Trump but we’re in full control of the kind of future we build for ourselves,” said Mr. Ford, who has become something of a fixture on American television news outlets recently as he has made the case against tariffs.
The government estimates that delaying tax bills will allow businesses to hold onto about 9 billion Canadian dollars for longer than they had anticipated.
“For a firm on the margin, this could matter, it will help.” Professor Gillezeau said. “But given that this is going to drag out, I don’t think the impact on firms’ survival will be particularly meaningful.”
The province said it was also returning 2 billion Canadian dollars of a surplus in a workplace accident insurance fund to employers as a further boost.
The Western province of Manitoba has announced payment deferrals for its businesses on some taxes, while Quebec and New Brunswick are offering low-cost loans for businesses to adjust to a world where the United States may no longer be a financially feasible market.
The Business Development Bank of Canada, which is owned by the federal government, has a special loan program for companies affected by tariffs. And, in another reprise from the pandemic, unemployment insurance rules have been altered to help workers whose hours will have been reduced because of the U.S. tariffs.
“We have not really been in a situation like this before,” Professor Gillezeau said. “Trying to identify which firms and sectors that are going to come out OK — that’s really tricky,” he added.
