The federal government is firing back at Stellantis and General Motors by limiting the number of tariff-free vehicles the automakers can import from the U.S. to sell in Canada, CBC News has learned.
The two multinational manufacturers will no longer be exempt from paying Canada’s retaliatory tariffs on as many U.S.-assembled vehicles as before, sources said.
The move is expected to put pressure on the companies to reinvest in Canadian production and workers to get this benefit back and avoid a big tariff bill.
“I think Canadians and the industry want the government to be tough on companies that don’t own up to those partnerships that in many cases have been worth billions,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
“And this is a great move.”
Ottawa is taking action after Stellantis announced its plan to expand in the U.S., including moving its production of the Jeep Compass in Brampton, Ont., to Illinois.
General Motors also confirmed Tuesday that it was ending production of its BrightDrop electric delivery vans at a plant in Ingersoll, Ont., due to demand.
In April, the Canadian government offered auto companies exemptions so they didn’t pay the price for Canada’s 25 per cent retaliatory tariffs on the American auto sector.
The federal government has announced that auto manufacturers will be allowed to import a certain number of U.S.-assembled vehicles — ones that comply with CUSMA — free of the countermeasure tariffs Ottawa imposed in response to Trump’s levies.
But that benefit came with strings attached: the automakers had to continue making vehicles in Canada and complete the investments they’d already planned.
If companies broke that condition, the government warned it would limit how many tariff-free vehicles companies could import from the U.S.
Sources told CBC News the government now believes Stellantis and GM are no longer meeting that requirement so Ottawa is lowering their remission rate quota until the companies live up to its promises.
The government is reducing GM’s annual remission quota by 24 per cent and Stellantis’s by 50 per cent. A remission quota allows a company to import a specific maximum number of goods like automobiles tariff-free, dependent on meeting production commitments.
CBC News is not naming the sources who have knowledge of the government’s move because they were not authorized to speak publicly about it.
Trump playing ‘hardball’
Unifor national president Lana Payne described the government’s move as a carrot-and-stick approach that she thinks will work.
Payne said U.S. President Donald Trump is playing “hardball” right now and “extorting corporations” to try and move production to the U.S.
“He’s doing everything he can to surgically destroy our industrial economy in Canada, including the auto industry,” Payne told CBC’s Power and Politics.
“If we don’t push back hard against him and against these companies, we’re going to lose it all.”
Canadian politicians of all stripes expressed anger and frustration over Stellantis moving Jeep production from Brampton, Ont., to Illinois — and Ottawa is considering taking legal action.
Industry Minister Mélanie Joly has called Stellantis’s move unacceptable and threatened legal action, citing the fact the government gave the company millions of dollars contingent on Stellantis keeping its Canadian footprint.
Joly warned on Tuesday she was looking for ways to put maximum pressure on the company to keep its commitments.
She posted on social media Thursday she met with GM, the Ontario government and the union to talk about the next step for workers and expects an update in 15 days.
Ontario Premier Doug Ford has threatened to sue GM if they breach their contract and don’t find a new product for the Ingersoll plant.
Prime Minister Mark Carney said on Thursday that while GM indicated it would honour its obligations to pay workers, that’s not enough.
“We’re not satisfied with that,” he said.
At an announcement with Ford, Carney said they are working on figuring out what else can be done with the GM plant and if it could be part of Canada’s upcoming defence industrial strategy. Carney has been working on a plan to pivot Canada away from overreliance on the U.S.
Carney also pointed to ongoing talks with the Trump administration to try and get some sectors relief from being pummeled by American tariffs.
The prime minister warned that if Canada doesn’t make progress on those talks, the government will “do what’s necessary to protect our workers.”
“It starts with building, taking the control there. But it’s also not having unfair access to our market, if we don’t have access to another market,” Carney said. “We’re not at that point.”
Prime Minister Mark Carney was asked by reporters about his approach to U.S. trade negotiations, highlighting discrepancies with that of Ontario Premier Doug Ford who has advocated for tougher treatment of the Trump administration.
Trump has signalled he wants to dominate auto manufacturing. The White House has been hitting Canada’s auto sector with a 25 per cent tariff on all finished vehicles that aren’t compliant with the Canada-U.S.-Mexico Agreement (CUSMA).
Trump’s commerce secretary Howard Lutnick told an audience in Toronto this month he wants to drain auto assembly from Canada.
Carney said Canada pays the lowest tariffs on auto and auto parts into the United States, but added that needs to be done as part of a “bigger set of negotiations” with the Americans.
“We have the best deal with respect to autos, but we have to work to get it even better,” he said.
Conservative leader Pierre Poilievre took aim at Carney on Thursday morning, saying he’s broken his promise to negotiate a win with Trump and protect Canada’s auto sector.
“We need him to actually keep his promise and defend auto workers in the negotiations with the Americans,” Poilievre said.
The Trump administration is exploring whether auto imports threaten national security.
