Canadian PM Mark Carney has declared his country’s close relationship with the US over as he threatens to hit back at President Donald Trump’s latest tariffs.

Carney said Canada would respond with unspecified trade actions if Trump pushes ahead with 25 per cent slug to vehicle imports, as flagged this week.

Canada’s old relationship with the US, “based on deepening integration of our economies and tight security and military cooperation, is over”, Carney said on Thursday (local time).

Speaking in Ottawa after a cabinet meeting, Carney said Canadians must “fundamentally reimagine our economy” in the face of Trump’s tariffs.

“It is clear that the United States is no longer a reliable partner,” he said.

“It is possible that, with comprehensive negotiations, we will be able to restore some trust, but there will be no turning back.”

He said Canada’s response would come next week, when the auto tariffs and other reciprocal tariffs on US trading partners are due to take effect.

“We will fight the US tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” he said.

The tariffs could add thousands of dollars to the cost of an average vehicle in the US, contradicting Trump’s campaign promise to lower consumer prices.

After Trump revealed his plan for tariffs on imported vehicles, Ferrari announced price hikes of up to 10 per cent for cars sold in the US. Other car makers have warned they might follow, while dealers have raised fears of job losses.

The S&P 500 ended lower on Thursday, with auto stocks falling. General Motors tumbled over 7 per cent and Ford slid 3.9 per cent. Car parts manufacturers Aptiv and BorgWarner each lost about 5 per cent.

Tesla edged up 0.4 per cent, with investors betting the electric vehicle maker will be hurt less by tariffs because of its largely domestic production.

The tariffs are a sucker punch for some of the US’s most important allies and will come atop other trade penalties Trump has already imposed.

They include a blanket 25 per cent tariff on Canadian goods, along with a 25 per cent duty on all aluminium and steel imports (which also applies to Australian exports to the US).

Canada has already retaliated with about C$60 billion ($A67 billion) of tariffs on US goods.

The new car tariffs will come into effect on 2 April, with charges on businesses importing vehicles starting the next day, the White House said.

Canada, Mexico, Japan, South Korea and Germany are the biggest suppliers of automotive imports to the US worth $US474 billion ($A752 billion) in 2024.

Carney said Canada would transform its economy to become less dependent on its southern neighbour, which has long been a close ally and important trading partner.

“We will need to reduce our reliance on the United States,” he said.

That may prove difficult. Vehicles are the second-largest Canadian export by value at $US51 billion in 2023 – of which 93 per cent went to the US.

With billions of euros wiped from German auto shares on Thursday, officials in Europe’s biggest economy have also called for a tough response.

“The US has chosen a path at whose end lie only losers, since tariffs and isolation hurt prosperity for everyone,” outgoing German Chancellor Olaf Scholz said.

In France, Finance Minister Eric Lombard called Trump’s plan “very bad news,” and said the only solution was for the EU to raise its tariffs.

Britain, which has struggled to expand its economy, was scrambling to secure an exemption. But it has also threatened to review subsidies for Tesla, which is headed by top Trump adviser Elon Musk.

The company, whose sales have plunged this year amid increased competition and a political backlash, is less exposed to Trump’s tariffs than its rivals, but Musk said on X that the impact was “still significant”.

China’s foreign ministry said the US approach undermined the multilateral trade system and was “not conducive to solving its own problems”.

With shares falling, Japanese Prime Minister Shigeru Ishiba said Tokyo will put “all options on the table” and South Korea said it would put in place an emergency response by April.

Trump considers tariffs a tool to raise revenue to offset his promised tax cuts and to revive a long-declining US industrial base.

Many trade experts, however, expect prices to initially rise and demand to fall, hurting a global auto industry that is already reeling from uncertainty caused by Trump’s rapid-fire tariff threats and occasional reversals.

Trump said has warned the EU and Canada not to team up to retaliate against the US move.

“If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both,” he posted on his Truth Social platform.

-with AAP