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On Monday, President Donald Trump warned that tariff rates on all vehicles, trucks, automotive components and steel entering the United States from Canada could be raised to 50 percent after weekend trade negotiations between the two countries failed to produce an agreement. According to the president, these higher rates could come into effect as early as January 1.

Relations between officials in the Trump administration and representatives of Canadian Prime Minister Mark Carney’s government have reached an intense stage, after tensions worsened over the weekend when both sides were unable to finalise a new trade pact last Friday. During those discussions, the Trump administration had sought the removal of some retaliatory tariffs that Canada had placed on American goods in response to Trump imposing tariffs on Canada last year, but those efforts did not succeed.

According to The New York Times, Trump had already announced tariffs on $20 billion worth of Canadian goods on Saturday after that diplomatic collapse. The newly announced auto-related tariffs take matters further still and risk disrupting the trade framework on which a large part of the North American automotive industry depends.

Trump wrote, “Canada has been ripping off the United States of America for years. Their ridiculously high tariffs on our Farmers and farm products has made life impossible for these great American Patriots, and has long created a 60 Billion Dollar Deficit between our two Countries. Not sustainable, and NOT ANYMORE! On January First, 2027, Tariffs on all Cars, Trucks, both large and small, Automotive Parts, and Steel, will be increased to 50%. They feel entitled, and yet, WE DON’T NEED CANADA, THEY NEED US!”

Canadian officials responded in similar fashion on Saturday, with Carney’s government going so far as to describe the present situation in trade as being “at war”. Canada’s formal response is expected to be detailed on Tuesday, but Carney has already pledged an appropriate reply to the American measures, which could include special tariffs aimed at U.S. agriculture, electronics, steel and other important sectors. The prime minister also said specifically that he believes the United States wants to damage Canadian industry, and that any further negotiations will require a change in approach first.

Carney said, “The attitude, at the negotiation table, that Canada is a subsidiary of the United States, that Canadian industry is going to be disadvantaged relative to American industry, that we’re going to set up terms so that over time Canadian industry is going face constant headwinds—that’s not something we’re going to accept.”

Canadian officials have since said that the collapse of the talks was caused by U.S. negotiators, claiming that Washington derailed the agreement with last-minute demands. However, Trump administration trade representative Jamieson Greer has argued the opposite.

Tariffs have already inflicted a major blow on the Canadian automotive industry in recent years, as its steel, components and fully assembled vehicles play an important role in supporting Detroit’s Big Three. Large manufacturers such as General Motors and Stellantis have already revised certain plans for their Canadian operations because of Trump’s tariffs.

Even so, this latest round of tariff measures is likely to face legal scrutiny. Trump has so far relied on Section 338 of the Tariff Act of 1930 to impose tariffs at will, but he has already encountered challenges on this front from the U.S. Supreme Court.