The Canadian federal government has responded to Stellantis and General Motors by reducing the number of tariff-free vehicles the automakers can bring in from the U.S. for sale in Canada. Previously exempt from paying Canada’s retaliatory tariffs on U.S.-assembled vehicles, the two companies will now face tariffs as a result of scaling back their Canadian manufacturing operations.
This decision aims to compel the automakers to reinvest in Canadian production and workforce to regain their tariff-free status and avoid substantial tariff costs. Ottawa’s move was prompted by Stellantis’ plan to shift production of the Jeep Compass from Brampton, Ont., to Illinois, and General Motors’ discontinuation of BrightDrop electric delivery van production in Ingersoll, Ont.
In April, the government granted auto companies exemptions from Canada’s 25% retaliatory tariffs on the American auto sector, provided they maintained production in Canada and fulfilled planned investments. Violating these conditions, Stellantis and GM have been accused of breaching their commitments to Canada and its workers.
As a consequence, the government has immediately reduced the tariff-free vehicle import quotas for GM by 24% and for Stellantis by 50%. Industry experts have expressed support for this action, emphasizing the importance of holding companies accountable for their commitments.
While some stakeholders raise concerns about potential price increases for Canadian consumers due to tariffs, others, like Unifor national president Lana Payne, view Ottawa’s approach as essential in countering U.S. President Donald Trump’s aggressive tactics aimed at shifting production to the U.S. Prime Minister Mark Carney has underscored the importance of protecting Canadian workers and industries amidst ongoing trade negotiations and tariff pressures.