Question Period Note: CANADA’S AUTO SECTOR - IMPACTS OF U.S. TARIFFS

What is the Government of Canada doing to support the Canadian automotive industry considering U.S. tariffs?

• The Government of Canada is committed to maintaining a strong Canadian automotive industry and the good-paying jobs that come with it.
• Automotive trade between Canada and the U.S. is balanced and shows how strong and interconnected our economies are.
• Canada is investing in its auto industry to strengthen supply chains, grow a future-ready economy, and deepen ties with reliable global partners.
• U.S. tariffs are hurting millions of people on both sides of the border by raising costs, raising prices, and lowering demand.
• Canada will continue to engage the U.S. to remove all tariffs.

• On average, Canadian vehicles contain approximately 50% U.S. content by value. In 2024, Canada imported nearly $30 billion worth of automotive parts from the United States.
• Because vehicles assembled in Canada contain a significant number of U.S. parts, the Canadian automotive sector also supports good-paying manufacturing jobs across the United States
• Canada has responded to the tariffs by introducing a suite of countermeasures designed to urge the U.S. to remove them as soon as possible.
• As global risks and unfair trade grow, Canada is engaging and partnering with trusted, like-minded nations to foster economic security, resilience, and trade diversification.

The Canadian automotive sector is anchored by five manufacturers: Stellantis, Ford, GM, Toyota, and Honda, which support over 125,000 direct jobs. The sector contributed $16.8 billion in 2024 to Canada’s gross domestic product, and is one of the country’s largest export industries.

In 2024, automotive trade with the U.S. totaled $152 billion ($75 billion in exports and $77 billion in imports).

On April 3, 2025, the U.S. implemented Section 232 tariffs of :
• 25 percent on all Canadian vehicles that do not meet the Canada-U.S.-Mexico Agreement (CUSMA) rules of origin; and,
• 25 percent tariffs on the value of non-U.S. content for vehicles that qualify under CUSMA.
CUSMA-compliant automotive parts are currently excluded from the 25 percent Section 232 tariffs until such time that the U.S. establishes a process to apply the tariff exclusively to the value of the non-U.S. content of automotive parts.

On April 29, 2025, President Trump issued a Proclamation to allow U.S. manufacturers to import automotive parts tariff-free up to 15 percent of the value of the U.S. assembled vehicles. Given that the offset is only applicable for a two-year period, it signals that the intent of the U.S. administration is to incentivize companies to shift their parts sourcing to U.S. facilities.

Effective April 9, 2025, Canada responded with reciprocal tariffs of 25 percent against imports of passenger vehicles and certain trucks from the U.S. Canada’s surtax order mirrors the U.S. approach with respect to CUSMA rules of origin.

On April 15, 2025, Canada announced a performance-based remission framework for automakers, designed to incentivize continued production and investment in Canada. The remission framework allows automakers that continue to manufacture vehicles in Canada and/or maintain their investments to import a certain number of U.S.-assembled, CUSMA-compliant vehicles into Canada, free of the countermeasure tariffs that Canada has imposed.