The Canadian government is pushing back against Stellantis and General Motors by reducing the amount of tariff-free vehicles the automakers can bring in from the U.S. for sale in Canada. CBC News initially disclosed that these two international companies will now have to pay Canada’s retaliatory tariffs on fewer U.S.-assembled vehicles.
This action is aimed at compelling the automakers to reinvest in Canadian manufacturing and workforce to regain their previous tariff exemptions and avoid significant tariff expenses. In response to Stellantis’ plan to expand in the U.S., which includes transferring production of the Jeep Compass from Brampton, Ont., to Illinois, Ottawa has decided to take these measures.
Furthermore, General Motors recently announced the discontinuation of production for its BrightDrop electric delivery vans in Ingersoll, Ont., citing demand factors. The federal government had previously offered exemptions to auto companies from Canada’s 25% retaliatory tariffs on the American auto sector, conditioned on the continuation of vehicle manufacturing in Canada and the fulfillment of planned investments.
Finance Minister François-Philippe Champagne and Industry Minister Mélanie Joly jointly stated that Stellantis and GM have violated their legal obligations to Canada. The government has promptly acted to reduce the number of American-assembled vehicles that GM can import tariff-free by 24% and Stellantis’s quota by 50%.
Flavio Volpe, President of the Automotive Parts Manufacturers’ Association, praised the government’s firm stance, emphasizing the importance of upholding partnerships beneficial to Canadians and the industry. Conversely, Huw Williams, national spokesperson for the Canadian Automobile Dealers Association, expressed concerns that the government’s response could lead to increased vehicle prices and negatively impact Canadian consumers.
Amidst these developments, Unifor national president Lana Payne believes that Ottawa’s “carrot-and-stick approach” will be effective in dealing with the current challenges posed by U.S. President Donald Trump’s trade tactics. There are ongoing discussions with the Trump administration to secure relief for sectors affected by American tariffs, with a focus on protecting Canadian workers and industries.
Prime Minister Mark Carney emphasized the necessity of safeguarding Canadian interests and hinted at potential strategies to diversify Canada’s economy and reduce reliance on the U.S. market. Carney also underlined the importance of ongoing negotiations with the U.S. to mitigate the impact of tariffs on various sectors, including steel and aluminum.
In conclusion, the government’s actions are a response to the shifting dynamics in the auto industry and the need to protect Canadian jobs and investments. The situation underscores the complexities of international trade relations and the challenges faced by policymakers in navigating trade disputes and safeguarding national interests.
