Prime Minister Mark Carney’s government is drafting an Auto Plan that gives better market access to companies that build vehicles in Canada, positioning the policy as a direct counter to US efforts to pull factories out of Canada and into the US.
The strategy is expected to be unveiled by Industry Minister Mélanie Joly in February and is framed internally as a response to factory and job losses since President Donald Trump imposed tariffs on foreign-made vehicles in April 2025.
Over the past year, GM shut down one plant in Ontario and threatened production cuts at another, while Stellantis cancelled plans to build Jeep vehicles at a factory near Toronto, shifting that output plan to Illinois.
Canada sold 1.9 million new vehicles in 2025, in a market with a population roughly comparable to California, and remains by far the biggest importer of US-made automobiles.
Many major brands selling into Canada do not assemble locally, including Tesla, Nissan Motor, and Kia, which serve Canadian demand from US and other plants.
Five companies currently operate auto assembly plants in Canada: GM, Stellantis, Ford Motor, Toyota Motor, and Honda Motor, with most production destined for the US.
Since Trump launched the trade war, US factories’ share of Canadian auto imports has declined while Mexico and South Korea gained share, according to Statistics Canada, adding urgency to a plan designed to stabilize Canada’s manufacturing base ahead of the coming Canada-United States-Mexico Agreement review.
The plan also opens the door for Chinese companies to assemble vehicles in Canada for the first time, under restrictions that may include using Canadian software and forming joint ventures with domestic firms.
Last week, Carney met President Xi Jinping in Beijing and announced a trade truce that eased Canadian tariffs on Chinese EVs, allowing about 49,000 vehicles annually under a low tariff of about 6%, while China is expected to cut tariffs on Canadian agricultural products and allow visa-free travel for Canadians.
Joly met Chinese automakers BYD and Chery on the trip, alongside Canadian auto parts supplier Magna International, and the deal includes a commitment by Chinese companies to explore major auto investments in Canada that Ottawa will review in three years for follow-through.
Before Canada’s 100% surtax in 2024, a large proportion of EVs imported from China were Teslas, and Carney’s government has promised to certify Chinese-made vehicles such as BYD over time, potentially shifting more of the 49,000-unit quota toward lower-cost Chinese manufacturers.
The Carney-Xi deal also includes a gradually increasing requirement that part of the quota be filled with vehicles priced at $35,000 or less, and Canada says it can require any domestically built EVs to run on a secure technology platform, with BlackBerry identified as a major player in vehicle software.
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