The future of Canada’s auto industry depends on the removal of U.S. tariffs and the renewal of the continental free trade agreement, the representative of the Detroit Three carmakers in Canada says.
The Canadian auto sector, integrated with those of the United States and Mexico for decades, does not have the option of diversifying into new markets in a meaningful way, and needs tariff-free access to the U.S. to survive, said Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association, which represents Ford Motor Co. F-N, General Motors Co. GM-N and Stellantis NV STLA-N.
“Bottom line is this: no U.S. access, no auto industry. Simple as that,” Mr. Kingston said at an industry event in Toronto on Tuesday.
U.S. President Donald Trump imposed 25-per-cent tariffs on the non-U.S. content of Canadian-made cars more than a year ago, in apparent violation of the free-trade agreement and causing a decline in production and auto jobs in Ontario. As negotiators prepare for the July review of the United States-Mexico-Canada Agreement, the car industries in Canada and the U.S. are pushing to restore tariff-free shipments and the removal of the Trump tariffs.
Mr. Kingston said the costs of tariffs are reducing sales of domestically-made cars on both sides of the border. Americans bought 132,000 fewer Canadian-made cars last year while Canadians bought 62,000 fewer U.S.-made vehicles, he said.
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Production at Canadian auto plants has declined to 1.2 million in 2025 from 2.3 million in 2016. The tariffs have also spurred the loss of jobs and shift of production to the U.S.
Meanwhile, Chinese auto production is up by 10 per cent and auto exports have risen by 21 per cent. “So as America fights with its strongest partners and allies, our competitors around the world are increasing their production and capabilities by leaps and bounds,” he said.
Speaking at the same event, Swamy Kotagiri, chief executive officer of auto parts company Magna International Inc. MG-T, said Canada’s auto industry must make products and create value that cannot be made elsewhere.
Mr. Kotagiri said policy makers and companies should focus on advanced manufacturing methods and automation that will keep Canadian factories “essential” to the sector.
Tariffs on Canadian, Mexican cars cost U.S. automakers $12.5-billion last year
This, he said, should come before attempts at preserving “legacy employment,” and the regional stability an auto plant creates with government subsidies for automakers. Auto employment and production have declined despite sustained taxpayer subsidies for the industry, he said.
“The implication is simple,” Mr. Kotagiri said. “Capital should flow towards capabilities, not specific factories.”
Recent events in Ontario underline Mr. Kotagiri’s message.
There have been large layoffs, prolonged retooling and one shutdown at automotive plants that have been the target of millions of dollars in taxpayer assistance. This includes Stellantis’s idled Brampton plant, and GM’s closed BrightDrop electric van factory in Ingersoll.
The Globe and Mail reported last week the federal government has granted $464-million to Ford for its Oakville truck plant. That plant’s retooling was shifted to gasoline- and diesel-powered pickups from electric cars as the growth in EVs slowed in the U.S. and Canada after consumer incentives were dropped and government policies changed. The decline of EVs has called into question government support for the sector, even as emissions-free vehicles gain in popularity in other parts of the world.
Opinion: Enough is enough. Canada must fight tariffs with tariffs
Tariffs, the EV shift and the rise of China are three of a handful of forces upending the auto industry, said Jordan Brennan, a managing director at Royal Bank of Canada’s Thought Leadership division.
“Canada’s auto industry is at the centre of the storm,” said Mr. Brennan, the author of a new report that lays out four possible paths for domestic car industry.
In the most optimistic of Mr. Brennan’s scenarios, free trade is restored, Chinese EVs are excluded and Ontario’s tech sector thrives along with the electrification of the auto industry.
In the gloomiest outcome, USMCA as it pertains to cars is scrapped or weakened, Chinese EVs flood the market and, Mr. Brennan writes, “by 2040, all auto assembly plants in Canada have shuttered.”
Most likely, Canada’s car industry faces a future marked by a mix of the above – some good, some devastating, he said. “What’s critical is that public policy remains flexible and adaptive to any possible future.”