Automaker allowed more tariff-free U.S. imports due to higher Canadian production

FILE PHOTO. A general view of the production line is shown during a tour of a Honda manufacturing plant in Alliston, Ont., Wednesday, Apr. 5, 2023. THE CANADIAN PRESS/Cole Burston

OTTAWA — Ottawa is letting an unnamed automaker import a higher quota of U.S.-made vehicles without tariffs because the company is selling and making more cars in Canada than first expected.

While the Liberal government dropped the bulk of its counter-tariffs on the United States in September, Canada still maintains import duties of 25 per cent on U.S. autos that are not compliant with the Canada-U.S.-Mexico agreement on trade.

Ottawa allows automakers to import a certain quota of vehicles made in the United States tariff-free, based in part on their level of automotive assembly in Canada. Those quotas are reviewed every three months.

An order-in-council decision dated Feb. 26 said an automaker asked for a higher quota level during the July to September review period because its sales in 2025 were stronger than expected.

The request was granted in part because the company’s level of domestic manufacturing was higher as well.

The automaker in question was not named in the order due to confidential financial concerns.

Industry Minister Mélanie Joly mentioned Honda and Toyota when asked Monday about the decision to raise the quota limit.

She said the idea of giving more tariff-free access to automotive firms that boost domestic production is central to the federal government’s auto strategy launched last month.

“We will actually support those who invest in us,” Joly said at a media availability in Ottawa.

“So when Honda and Toyota increase their production in Canada, we will make sure that they have greater market access. Period.”

Finance Canada spokesman Benoit Sabourin said in an email Monday that Ottawa is reviewing the auto tariff remission program to find more ways to encourage carmakers to invest in Canadian production. That review started Feb. 27 and is expected to wrap by April 13.

Aside from the auto sector, Canada also has kept up counter-tariffs of 25 per cent on steel and aluminum coming from the United States.

Sabourin said this specific remission framework is “unique to the automotive sector” and relies on companies maintaining production in Canada and following through on planned investments.

This report by The Canadian Press was first published March 9, 2026