Sean Kilpatrick/The Canadian Press
Brian Kingston is president and chief executive officer of the Canadian Vehicle Manufacturers’ Association.
The future of Canada’s auto industry hangs in the balance as tariffs and trade uncertainty upend one of our most important economic sectors. Now, more than ever, we need a comprehensive plan to protect and support the industry.
Auto manufacturers have been operating in Canada for well over 100 years. Ford Motor Co. F-N, General Motors Co. GM-N and Stellantis NV STLA-N have assembled more than 100 million cars here since 1945 (a figure that includes predecessor companies). Today, they are the largest employers in the auto manufacturing sector, supporting more than 20,000 direct jobs, the majority of which are unionized.
Despite countless crises and economic downturns, the sector persists and continues to be the linchpin of our industrial base. Surviving the latest challenges triggered by U.S. tariffs requires all hands on deck.
Action can be taken now to strengthen the auto industry and bolster our competitiveness in the face of trade uncertainty. We should not wait for the federal government to negotiate away U.S. Section 232 tariffs and renew our North American trade agreement.
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First, we need a world-class regulatory environment that encourages investment instead of deterring it. Repealing the federal government’s electric-vehicle sales mandate, the Electric Vehicle Availability Standard or EVAS, should be priority No. 1.
EVAS phases out the sale of the very vehicles manufactured in Canada today. Mandating increasing sales of zero-emission vehicles (ZEVs) gives auto companies no choice but to restrict and eventually eliminate the sale of internal combustion engine and hybrid vehicles built at our Canadian facilities. Of the 1.3 million vehicles built in Canada in 2024, 95 per cent of them will be prohibited for sale in less than a decade under EVAS. This is an incomprehensible outcome as we work to protect Canada’s auto manufacturing footprint and the hundreds of thousands of Canadians it employs.
Second, we should make Canada the most cost-competitive jurisdiction in North America for advanced manufacturing. Under the One Big Beautiful Bill, the U.S. administration is making permanent cuts to corporate tax rates, providing special depreciation allowances for production properties, increasing the advanced manufacturing investment credit and undertaking a wide-ranging deregulation exercise with implications for Canada’s relative automotive industry competitiveness.
The federal government’s recent introduction of a productivity superdeduction and enhancements to the Scientific Research and Experimental Development tax incentive program are steps in the right direction. By lowering the cost of investing in machinery and research, Ottawa is tilting the playing field back in favour of Canada.
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But there is more we can do to position Canada for success. Donald Trump’s tariff policy is making the United States a high-cost manufacturing jurisdiction. Automakers are expected to face US$188-billion in tariff costs over the next three years. It is more cost-effective to manufacture a vehicle in Japan or Germany and export it to the U.S. than to build a vehicle in North America for the U.S. market. Rather than engaging in tit-for-tat protectionism with the U.S., we have an opportunity now to lower the cost of manufacturing here.
And finally, Canada should reaffirm its tariffs on Chinese EVs to ensure a level playing field. China’s nonmarket policies combined with exploitive environmental and human-rights practices cannot be ignored in favour of cheaper vehicles. Tariffs should be accompanied by a ban on Chinese-connected vehicle software and hardware that is aligned with U.S. measures. This will protect Canadian drivers from foreign actors manipulating these technologies to access sensitive or personal information.
Strengthened trade policy and investment authorities are also needed for responsive anti-subsidy investigations and to address gaps in our investment approval process. This is particularly important as the federal government seeks to build out a critical-minerals supply chain that reduces automaker dependence on China.
Every crisis creates opportunities. With the right actions now, Canada can create a stronger auto industry that ensures we are building cars for the next 100 years.