Canada Removes Tariffs for Automakers Pledging to Maintain Operational Plants -

Mark Carney, the Prime Minister of Canada, declared that his government will allow automakers to import vehicles made in the US free of tariffs, as long as these companies maintain their production efforts in Canada.

This move provides a degree of relief from the ongoing trade conflicts for firms like General Motors Co. and Stellantis NV, which have assembly plants in Ontario and also ship considerable quantities of vehicles from the US to Canada.

Last week, Carney announced retaliatory duties of up to 25% on vehicles manufactured in the US, mirroring a previous action taken by US President Donald Trump against imported automobiles. Over the years, the automotive supply chain has been closely linked among the US, Canada, and Mexico.

A significant portion of cars and trucks built in Canada is exported to the US, where American-made vehicles hold a dominant share among Canadian auto dealerships.

“Our counter-tariffs will not take effect as long as they continue to produce, hire, and invest in Canada,” Carney explained at a press conference. However, if a manufacturer scales back production or investment in Canada, the amount of tariff-free vehicles it can bring in will be reduced, according to a statement from Canada’s Finance Department.

The announcement from the Carney administration comes amid increasing concerns that automakers might move their production out of Canada due to Trump’s tariffs. Stellantis has temporarily halted operations at its Windsor, Ontario plant, where Chrysler and Dodge vehicles are produced, while General Motors recently suggested plans to close a Canadian facility for several months due to a drop in demand for the electric vans it manufactures. Ford Motor Co. has an assembly facility in a Toronto suburb but is not currently operational.

Simultaneously, Japanese media outlet Nikkei reported that Honda Motor Co. is contemplating shifting some of its auto production from Canada and Mexico to the US, aiming for 90% of its US vehicle sales to be produced domestically.

Currently, Honda manufactures CR-V and Civic models at its facility in Alliston, Ontario, and last year announced a C$15 billion ($10.8 billion) long-term plan to develop an electric vehicle supply chain in Canada, significantly backed by taxpayer funding.

Industry Minister Anita Anand is set to meet with the head of Honda’s Canadian operations on Tuesday, as noted in an official statement. “We are maintaining close communication with the company, and Honda has clarified that no production shifts affecting Canadian operations have been decided or are being considered at this moment,” her office conveyed via email.

A representative from Honda stated via email that the plant “will continue to operate at full capacity for the foreseeable future, with no changes under consideration right now.”

As he campaigns for the national election on April 28, Carney mentioned that he and other government officials have had multiple discussions with global automaker leaders.

“We are fully engaged with the challenges” regarding the auto tariffs, Carney underscored, referring to a campaign promise to establish a C$2 billion fund aimed at strengthening the Canadian auto supply chain. Regardless of the election results, negotiations with Trump will be essential to create a broader strategy related to the tariff dispute, he indicated.

Carney asserted that the Trump administration’s auto tariffs will ultimately lead to increased costs for consumers in both the US and Canada. “It’s ill-advised, it won’t succeed,” he commented, noting indications that Trump may be re-evaluating some of these policies.

Carney’s main rival in the upcoming election, Conservative Party Leader Pierre Poilievre, has also pledged to engage with Trump concerning tariffs and has suggested eliminating the federal sales tax on new cars produced in Canada.

The government also announced a temporary six-month tariff exemption for imports from the US that are used in Canadian manufacturing, processing, and food and beverage packaging, along with certain goods related to public health and national security objectives.

Presently, Canada imposes 25% counter-tariffs on around C$60 billion in US products aside from automobiles. These tariffs are affecting a wide range of US steel and aluminum goods, as well as items such as tools, computers, and consumer products.

The exemptions announced on Tuesday will provide relief to Canadian businesses dependent on US components, as well as to institutions like hospitals, long-term care facilities, and fire departments, as stated by the government.

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