Canada is reworking auto trade access and incentives to keep assembly plants and jobs in-country as US tariff pressure squeezes Canada’s export-heavy auto base, where over 90% of Canadian-made vehicles and 60% of Canadian-made parts are shipped to the US.
Prime Minister Mark Carney’s recently announced auto strategy commits to strengthening Canada’s automotive remission framework to reward companies that produce and invest in Canada, while maintaining counter-tariffs on auto imports from the US to “ensure a level playing field” in the domestic market.
This follows after Canada reduced GM’s tariff-free import quota by 24.2% after production reductions and Stellantis’ tariff-free import quota by 50% after canceling Canadian production plans.
Since April 2025, Canadian-made vehicles have faced a 25% US tariff on non-US content, with the value of US content in CUSMA-compliant autos exempt. Ottawa pegs the exposure at 125,000 direct jobs tied to an industry that supports over 500,000 workers and contributes over $16.0 billion annually to GDP.
The federal plan allocates $3.0 billion from the Strategic Response Fund plus up to $100.0 million from the Regional Tariff Response Initiative to help the industry adapt, grow, and diversify to new markets.
Ottawa is also leaning on the Productivity Super-Deduction and reduced corporate tax rates for zero-emission technology manufacturers to encourage clean-tech and EV investment.
Canada will introduce stronger greenhouse gas emissions standards aligned to a 75% EV sales goal by 2035 and 90% by 2040, while repealing the Electric Vehicle Availability Standard on the rationale that an outcomes-based approach lets manufacturers deploy a wider range of technologies and respond to near-term consumer preferences.
In addition, a five-year, $2.3 billion EV Affordability Program will offer purchase or lease incentives up to $5,000 for battery electric and fuel cell EVs and up to $2,500 for plug-in hybrids, capped at a final transaction value of $50,000 for vehicles made by countries with Canadian free trade agreements. The $50,000 cap will not apply to Canadian-made EVs and PHEVs.
Separately, Canada will invest $1.5 billion via the Canada Infrastructure Bank’s Charging and Hydrogen Refueling Infrastructure Initiative.
Ottawa cites a Canada–Korea MOU on “future mobility” and a new strategic partnership with China intended to catalyze investment and permit a fixed volume of Chinese EV imports. The Canada–China EV arrangement described a roughly 49,000-vehicle annual import allowance at about a 6% tariff, with an increasing requirement that part of the quota be priced at $35,000 or less, after Canada’s 100% surtax in 2024.
A new Work-Sharing grant is intended to prevent layoffs and support retention, alongside a workforce alliance to address bottlenecks. Ottawa is committing $570 million to provide employment assistance and reskilling supports for up to 66,000 workers.
Earlier this year, it was reported that GM laid off more than 700 workers at Oshawa Assembly by eliminating a third shift, with union estimates rising to up to 1,200 impacted when suppliers are included. Canada and Ontario each committed up to $259 million in 2022 to upgrade GM’s Oshawa and Ingersoll facilities, and Ottawa says a clawback “in the millions” is under review as GM reported more than $12.0 billion in 2025 pre-tax earnings and announced a $6.0 billion share buyback.
On the other hand, Stellantis faces a larger recovery attempt from Ottawa after shifting its Jeep Compass output from Ontario to Illinois and canceling Brampton retooling plans tied to over $1.0 billion in Canadian support, eliminating about 3,000 jobs. Canada served a notice of default in December and has been in talks since at least November, with nearly 240 employees accepting transfers within Ontario.
In contrast, Toyota invested $1.1 billion to launch sixth-generation RAV4 production in Ontario and maintains over 8,500 employees at Cambridge and Woodstock facilities. Major US automakers’ share of Canadian auto production fell to 23% last year from 56% in 2016, while Honda and Toyota account for 77% of production.
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