Trump's 50% Auto Tariffs On Canada Are Going To Ravage Jobs And Profits On Both Sides Of The Border

Good morning! It's Tuesday, August 25, 2026, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. This is where you'll find the most important stories that are shaping the way Americans drive and get around.

In this morning's edition, President Trump's 50% vehicle tariffs could end up in disaster for the automotive industries of both Canada and the U.S., Canadian Prime Minister Mark Carney says they'll only go back to the bargaining table when the U.S. has "the right attitude," Volkswagen's CEO got booed over his job cut plans during a company-wide meeting, and Porsche is going all-in on AI.

If you'd like a recap of the latest auto news sent to your inbox each weekday, you can sign up for Jalopnik's free Morning Shift newsletter here.

President Trump may have designs that his newly escalated trade war between the U.S. and Canada will actually help our country and the automotive industry, but the numbers are telling a different story. His latest scheme threatens to further undercut the competitiveness of a deeply integrated North American auto industry. In the process, that could put jobs and automaker profits at risk in both countries.

When Trump threatened to increase U.S. tariffs on Canadian auto exports to 50% starting on January 1, Canada vowed to fight back to protect its local assembly plants and parts suppliers. This whole disaster (or at least the most recent phase of it) started late last week, after Washington and Ottawa seemed ready to ink a trade deal that would end a year-and-a-half-long trade war. However everything fell apart in the final hours when the topic of medium- and heavy-duty truck and auto parts came up.

The last 18 months of this tit-for-tat trade war have already left their mark on the automakers and buyers alike, and this new escalation would most likely be even more devastating for both. From Automotive News:

The North American auto sector pushed back against U.S. parts tariffs in 2025 and is certain to do so again, said Flavio Volpe, CEO of the Automotive Parts Manufacturers' Association.

"A threatened U.S. tariff on Canadian auto parts will be paid by U.S. auto assembly," he wrote on social media. "Without those specific parts, auto assembly throughout the U.S. would halt."

Auto union Unifor, which represents hourly workers at Detroit Three plants in Canada, said Trump's "latest intimidation tactic" fails to recognize that automotive instability will hurt workers on both sides of the border.

Unifor President Lana Payne said Canada had no choice but to walk away from the "bad" deal offered by the Trump administration

[...]

As with Payne, Ontario Premier Doug Ford said Carney did the right thing in walking away from a bad deal that would have hurt autoworkers in Ontario, as well as those south of the border.

[...]

"Now the choice is: do we keep buying American vehicles?"

Automakers, especially the Big Three, are pushing for a resolution between the two North American countries, especially as the status of the U.S.-Mexico-Canada Agreement on trade remains precarious at best and dead at worst.

The Pacific Manufacturing Association of Canada (PMAC), which represents Honda and Toyota, pressed for efforts to get back underway to return free trade to North American automotive.

Group CEO Brendan Sweeney told Automotive News Canada that the prospect of added tariffs Jan. 1 is "a long way away" and PMAC is focused on making progress on tariffs this fall.

Automaker groups in the United States conveyed the same message.

"We urge U.S. and Canadian negotiators to reach a deal that enhances North American auto competitiveness and brings about a successful USMCA review," said Matt Blunt, president of the American Automotive Policy Council, which represents the Detroit Three.

The two government should continue work on finalizing an interim deal, said Jennifer Safavian, CEO of Autos Drive America, which represents overseas automakers.

"The escalating tensions between the U.S. and Canada will continue to harm both countries' auto industries and we are disappointed that the two nations were not able to reach an agreement."

It's hard to know exactly where a 50% tariff would take the industry. But over the first year the current tariffs were in place, Canadian vehicle output slumped 15%, and when Ford, GM, Honda, Toyota and Stellantis all have plants in Ontario, that's a lot of cars and a lot of jobs.

Unfortunately, it doesn't look like an agreement on trade is going to be reached anytime soon between the U.S. and Canada. Prime Minister Mark Carney said his country would only return to the negotiating table to work out a deal with Trump once its attitude changes and it stops treating Canada like a subsidiary (I'm sure the 51st state thing doesn't help). From Automotive News:

"When the Americans go to the negotiation table first, with the right attitude toward our industries and a true partnership, of course we'll come to the negotiating table," Carney told reporters here.

"An 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 are going to set up terms so that over time Canadian industry is going to face constant headwinds, that's not something we're going to accept.

"And that's before you get to constraints on our ability to do what the rest of the world wants, which is to sign trade deals with Canada. And that's before the fundamental issues on culture."

[...]

 [Trump] made a second post threatening Canadian energy flowing through the United States.

"Remember, much of the Electricity, Oil, and Gas that Canada gets is transported through the U.S.A. Someone should get these clowns to 'fall in line' or, the consequences for Canada will be far WORSE!" Trump posted.

Trump also reiterated previous accusations that Canada has been "ripping" the U.S. off for years, and repeated his insistence that the U.S. does not need anything from Canada.

"They feel entitled, and yet, WE DON'T NEED CANADA, THEY NEED US!" Trump posted.

Of course, Trump is neglecting to mention that Canada is the largest source of energy imported by the U.S., and it also supplies about 90% of the potash it uses in agricultural fertilizers in addition to about a third of the uranium used by American nuclear power plants.

Trump also claimed Canada is reliant on the U.S. for 95% of its exports; however, data shows that in 2025 that number was actually 72%, and in the first six months of 2026, the number was 68%. Facts don't care about your feelings, though.

Have you ever been booed by a person? How about a small crowd? How about a large crowd? How about 10,000 people? Well, if you have, you might be Volkswagen CEO Oliver Blume, and those 10,000 people might be your employees who hate you.

They all showed up at the automaker's headquarters on August 25 as the CEO urged staff to "pull together" behind a restructuring plan that could end up costing nearly 50,000 people their jobs. So far, Blume's plans have failed to get past the automaker's supervisory board, where the labor side and the state of Lower Saxony have a strong influence. 

Maybe they're not booing, they're saying BOO-m! From Reuters:

Workers gathered in Wolfsburg holding banners and signs, with some forced ​to watch proceedings on a livestream set up outside the packed venue, two sources in attendance said.

[...]

"Our plan for the future is the largest transformation programme in our company's history. To make this happen, everyone needs to pull together now," he said in Wolfsburg's Hall 11, the first stop on his planned tour ​of Volkswagen plants this week.

One source said his speech was met with boos from the crowd. Banners bore slogans ​such as "Our jobs are not your balance sheet adjustments" and "Respect is not up for negotiation", according to another source.

Speaking on behalf of ‌the ⁠workforce, Volkswagen labour leader Daniela Cavallo said German factories were "an integral part" of the group, reiterating her opposition to closures.

"Our trust in this company's executive board, and especially in its CEO Oliver Blume, has been damaged. Not yet beyond repair, but damaged nonetheless," she said, according to excerpts of her speech shared by the works council.

Squeezed by aggressive Chinese competition rushing to Europe, ​falling profits in China and ​billions in U.S. tariff costs, ⁠Volkswagen is also struggling with declining profits and costly overcapacity in Europe.

In his speech to workers, excerpts of which were shared by the company, Blume stressed that the 50,000 job ​cuts were based on a theoretical benchmark to bring Volkswagen's costs into line with ​competitors. He also ⁠said that no decision had been taken on factory closures, which he called the "last and most expensive resort".

He has previously said that the defence sector or Volkswagen's models for the Chinese market, currently not available in Europe, may offer preferable ⁠solutions to ​address overcapacity at German plants.

VW's management has yet to announce any sort of breakthroughs on their proposals, and automotive production is set to end at its plant in Osnabrueck as early as next year. It'll be the first of five proposed plants to close, as four more have no plans beyond 2030.

Yeah, I think I'd boo.

There's some strange stuff going on inside the Volkswagen Group. Porsche has officially signed a five-year contract, worth about $1.5 billion, for artificial intelligence with India's largest IT service firm, Tata Consultancy Services. As part of the deal, TCS will acquire Porsche's IT consulting business, MHP, for $374 million. From CNBC:

This will combine Porsche's "automotive expertise with TCS's digital and AI capabilities," Michael Leiters, chairman of Porsche, said in the press release. The partnership will boost the European sports-car maker's innovation, efficiency and competitiveness "in an increasingly data- and software-driven world of mobility."

Since the start of the year, TCS has secured multiple AI-led business transformation deals and has said its annualized AI revenues were $2.6 billion in the June quarter, up 13.6% from a quarter earlier.

[...]

The deal with Porsche will be effective once the Indian software giant completes the acquisition of MHP, which employs around 4,500 people. With this acquisition, TCS aims to "industrialize AI at scale for Porsche," said K. Krithivasan, chief executive and managing director of TCS.

[...]

The sale of MHP is part of Porsche's "Sportwagenschmiede 35" strategy, which aims to improve the profitability and cash flow of the automaker. "We are firmly aligning our company with our core business," Leiters said last month, adding that the key element of the strategy would be to streamline the operations at all levels

When I think of Porsche, I think of an AI leader, so this makes all the sense in the world to me.

History.com

On behalf of the entire hungry yet poor/cheap world, we thank Ando for his service. I'm not sure where I'd be without instant ramen, but I know I'd be there weighing about 10 pounds less. If you want to learn more about Ando and his beautiful creation, head over to History.com.

Despite all of the turmoil in the world, and specifically in the Middle East and Iran, gas prices have remained largely flat for over a month at this point, and that trend isn't changing today. It's a similar story with WTI Crude Oil futures and Brent Crude prices, which were also at $82 and $88, respectively, at the time of publication.

Here's where national average prices stand right now, according to AAA:

AAA

What all this means is the average price of a gallon of regular stayed exactly the same overnight, locked in at $4.10 according to AAA. We've been in and around that number for what feels like decades at this point. Maybe one day it'll budge, but today isn't that day.

I'm flying over to London tonight to check out some very cool stuff I'm not allowed to tell you about yet, and I cannot think of a better way to celebrate that than with the Britpop band.