Business leaders urge Canada to rethink strategy as U.S. auto incentives expand

Colton Praill with a look at the future of vehicle manufacturing in Canada amid Trump’s trade war.

U.S. President Donald Trump has repeatedly said that he wants to take auto manufacturing out of Canada and bring it back to the United States. Now, the head of the Business Council of Canada says the country may need to consider letting him do it.

“What we’ve built here is working, but we have to hear what is being said,” Goldy Hyder said. “We want to shoot the messenger, but we are in the world we’re in and I can tell you this much - from a business perspective, in the world that we’re in - no agreement is not an alternative.”

“I respect the fact that our auto companies are making the case that in fact, this is good - that the model works, what we’ve built here is working - but we have to hear what is being said,” he added.

October has been a difficult month for the auto sector in Canada. Tuesday, General Motors announced it is ending production of the Chevrolet BrightDrop electric parcel van in Ingersoll, Ontario.

The week prior, Stellantis announced it would move planned production of the Jeep Compass from it’s Brampton facility to Illinois, citing a US$13-billion plan to increase American production.

The changes cost over 4,100 Canadian jobs.

“We would be foolish at this point not to have somewhere between moderate and heavy concern,” said Brendan Sweeney, managing director for the Trillium Network for Advanced Manufacturing.

Hyder doesn’t advocate to abandon the auto industry, rather to focus on what elements are protected from Trump’s isolationist policies.

“There are a lot of jobs at stake in the auto industry. There are probably more jobs in the parts sector than the car making sector. They’re not coming after our parts sector; they’re coming after our cars.”

According to Statistics Canada, as of July there were over 54,000 Canadians directly employed in motor vehicle, vehicle body and trailer manufacturing compared to nearly 66,000 people directly employed in vehicle part manufacturing.

The Canadian Vehicle Manufacturers’ Association links over 600,000 direct and indirect jobs to the auto industry across the country.

Sweeney says American policies to increase vehicle production in the United States will mean there is still a market for auto parts from Canada, but argues that doesn’t mean Canada should forgo existing manufacturing.

“That’s good but that’s not good enough. Making the vehicles is pound for pound about twice as valuable as making most parts,” he said.

In the first half of 2025, the Detroit Three – Ford, General Motors and Stellantis – produced 20% of the cars made in Canada, although Ford’s Oakville plant is being retooled and not currently mass producing vehicles.

This week, the federal government limited how many vehicles Stellantis and GM can import tariff-free after both companies cut back on their Canadian operations.

Finance Minister François-Philippe Champagne posted on social media, saying the government is “deeply disappointed.”

Meanwhile, American manufacturers are seeing unexpected reprieve from the impact of tariffs after the White House updated its policies, extending a 3.75% rebate on the Manufacturer’s Suggested Retail Price for domestically-assembled vehicles until 2030.

In its third quarter earnings call, Ford Motor Company said the move will save over a billion dollars in expected tariff costs while General Motors thanked the President in their quarterly update.

“A U.S. automaker by moving their operations from Canada to Mexico into the United States is not only saving the duty costs of importing their vehicle, but now they’re getting this subsidy on top,” said Stephen Beatty, former vice-president of Toyota Canada.

Beatty argues Ottawa should better tie the ability to import vehicles into Canada tariff-free as an incentive for international vehicle makers to produce more in the country.

“I think [the federal government] was trying to hold what it had but I think as we move forward - and think what’s the industry of the future - you want to put as many incentives in place that don’t cost tax payers money but direct the industry to do certain things; and that’s where remission can come into play,” he said.