Trump hikes Canada auto and steel tariffs to 50% — US automakers slide, Tesla included

Trump announced via social media on Monday that tariffs on Canadian-made cars, trucks, auto parts and steel would rise to 50% effective Jan. 1, 2027, after last week's trade negotiations with Canada fell apart. The deal on the table would have cut Canadian auto tariffs from 25% to 15% and steel/aluminum tariffs from 50% to 25%, but talks broke down Friday over how much relief would extend to medium- and heavy-duty trucks.

The announcement rattled US automakers broadly — Ford and Stellantis both dropped about 4%, while GM also slipped. Tesla (TSLA) closed roughly 3.8% lower at around $348, down from Friday's $362.86 close. The Nasdaq and S&P 500 also fell the same day on a mix of Iran-sanctions and US-Canada trade jitters, suggesting much of Tesla's decline reflected broad market risk-off sentiment rather than a Tesla-specific catalyst.

Crucially, the new tariffs don't apply to vehicles built in the US. Tesla manufactures the vast majority of the cars it sells domestically at its Fremont, California and Austin, Texas plants, giving it less direct exposure than Ford, GM and Stellantis, which import a larger share of Canadian-built vehicles and components. Elon Musk reportedly pointed to Tesla being the 'most Made in America' car brand as a reason the tariffs should have limited impact on the company.

The tariff news landed on top of Tesla's already-heavy week, which opened with its largest-ever China recall (roughly 2.98 million vehicles). The bigger swing factor for automakers now is whether the US and Canada reach a follow-up deal before the tariffs take effect in January 2027.