Canada to drop tariffs on US-made cars if automakers keep production local | World News

The move provides some relief from the trade war to companies including General Motors Co. and Stellantis NV that have assembly plants in Ontario but still export large quantities of vehicles from the US into Canada.

Last week, Carney put retaliatory tariffs of as much as 25% on vehicles made in the US, effectively matching an earlier move by US President Donald Trump on foreign autos. The two countries, along with Mexico, have operated a tightly integrated automotive supply chain for decades.

Most of the cars and trucks made in Canada are shipped to the US, and US-made vehicles dominate sales at Canadian auto dealers.

“Our counter-tariffs won’t apply if they continue to produce, continue to employ, continue to invest in Canada,” Carney told reporters at a news conference. But if a manufacturer cuts production or investment in Canada, the number of tariff-free vehicles it will be permitted to import will be reduced, Canada’s Finance Department said in a news release.

The Carney government’s announcement comes amid increasing concern that automakers will pull production out of Canada in response to Trump’s tariffs. Stellantis has temporarily idled a plant in Windsor, Ontario, that makes Chrysler and Dodge vehicles, while General Motors on Friday said it plans to shut down a Canadian plant for months due to weak demand for the electric vans it makes. Ford Motor Co. has an assembly plant in a Toronto suburb but it’s not currently operating.

Meanwhile, Japanese media outlet Nikkei reported that Honda Motor Co. is looking at shifting some of its auto production from Canada and Mexico into the US, with a goal of having 90% of its US vehicles sales produced locally.

Honda currently builds CR-V and Civic vehicles at a plant in Alliston, Ontario, and last year it announced a C$15 billion ($10.8 billion) long-term plan to build out an electric-vehicle supply chain in Canada — with significant help from taxpayers.

Anita Anand, the industry minister, is scheduled to meet with the head of Honda’s Canadian division on Tuesday, according to a statement. “We are in close contact with the company, and Honda has communicated that no such production decisions affecting Canadian operations have been made, and are not being considered at this time,” her office said by email.

A Honda spokesperson said by email that the plant “will operate at full capacity for the foreseeable future and no changes are being considered at this time.”

Carney, currently campaigning for the national election on April 28, told reporters that he and other government ministers have had a number of conversations with the executives of global automakers.

“We are very seized with the issues” around the auto tariffs, Carney said, pointing to a campaign promise he made to set up a C$2 billion fund to help strengthen the Canadian auto supply chain. Whoever wins the election will need to negotiate with Trump on a broader strategy to resolve the tariff war, he said.

Carney told reporters that the Trump administration’s auto tariffs will ultimately add costs for both American and Canadian consumers. “It’s misguided, it’s not going to work,” he said, adding there are already indications Trump is rethinking some of the measures.

His chief rival in the election, Conservative Party Leader Pierre Poilievre, has also promised to negotiate with Trump on tariffs, and has suggested removing the federal sales tax on new Canadian-made cars.

The government also said it will provide a tariff reprieve for six months on imports from the US that are used in Canadian manufacturing, processing and food and beverage packaging, as well as for certain items related to public health and national security objectives.

Canada currently has 25% counter-tariffs on about C$60 billion worth of US products, aside from autos. Those taxes are hitting a wide range of US steel and aluminum products, plus items such as tools, computers and consumer goods.

The exemptions announced Tuesday will provide a break to Canadian businesses that rely on US inputs, as well to institutions such as hospitals, long-term care facilities and fire departments, the government said.