Canada Hits Back with Auto Tariffs and Industry Support

Amid escalating trade tensions, Prime Minister Mark Carney has announced that Canada will impose a 25% tariff on all U.S. vehicle imports that do not comply with CUSMA, the North American trade agreement. However, auto parts will be exempt from the tariffs to ensure the efficiency of the highly integrated supply chain between the two countries.

In response to the tariff dispute, Conservative Leader Pierre Poilievre has proposed a tax relief measure aimed at supporting Canadian-made vehicles. During a campaign stop in Kingston, Ontario, Poilievre outlined a plan to eliminate the federal sales tax on vehicles manufactured in Canada. He estimated that this move would reduce the cost of an average vehicle by approximately $2,500, encouraging more Canadians to support domestic manufacturers. Furthermore, he urged provincial governments to remove their respective sales taxes on Canadian-made vehicles, further increasing savings for consumers. Poilievre also criticized Carney’s negotiations with U.S. President Donald Trump, stating that Canada had gained little from them. If elected, he vowed to demand an expedited renegotiation of CUSMA on his first day in office.

While the Canadian auto industry braces for potential impacts, General Motors Canada has confirmed that its manufacturing facilities remain fully operational despite the ongoing trade conflict. “GM Canada’s manufacturing facilities are operating as usual, and we continue to monitor and assess the situation,” the company stated. In contrast, Stellantis has announced a temporary shutdown of its Windsor, Ontario plant, affecting production and workforce operations. Additionally, 900 Stellantis employees in the U.S. are facing temporary layoffs as a result of the escalating trade dispute.

Ontario Premier Doug Ford has expressed strong support for Canada’s countermeasures against the U.S. auto sector. Speaking to reporters at Queen’s Park following a virtual meeting with Prime Minister Carney and other provincial leaders, Ford emphasized the need for a firm response. “I fully support retaliatory tariffs on the U.S. auto sector, similar to what they’ve imposed on us,” Ford said. “We need to negotiate from a position of strength, not weakness. But ultimately, it’s up to the Prime Minister to determine how Canada will respond.”

Despite these challenges, Canada remains home to a robust automotive industry, with several domestic manufacturers and major global automakers operating within its borders. Canadian automotive brands include BRP (Bombardier Recreational Products), which produces recreational vehicles like Can-Am motorcycles and ATVs, Campagna Motors, known for its three-wheeled vehicles like the T-Rex, and Felino Cars, a boutique manufacturer of the Canadian-built Felino cB7 sports car. Additionally, Prevost and Nova Bus, subsidiaries of Volvo, produce motorcoaches and public transit buses, while Conquest Vehicles specializes in luxury armored SUVs like the Knight XV.

Several international automakers also have a significant presence in Canada. General Motors Canada produces Chevrolet and other GM vehicles in Ontario, while Ford Canada operates engine and assembly plants. Stellantis (formerly FCA, Chrysler Canada) manufactures Chrysler, Dodge, Jeep, and Ram vehicles in Windsor and Brampton. Toyota Canada assembles the RAV4 and Lexus RX in Ontario, and Honda Canada manufactures the Civic and CR-V in Alliston, Ontario.

As trade tensions continue to unfold, Canada is balancing retaliatory actions with strategies to bolster its domestic automotive industry, ensuring stability and competitiveness in an uncertain global market.