April 22, 2025 — Toronto, ON
Canada’s automotive industry is feeling the ripple effects of the U.S. tariff debate as major automakers with plants across Ontario and Quebec begin to scale back production. The uncertainty surrounding the U.S. government’s next move on automotive parts tariffs is prompting caution throughout the North American supply chain.
Manufacturers like Stellantis Canada, Honda Canada, and Toyota Motor Manufacturing Canada have started to temporarily halt or slow down assembly lines due to fears over parts availability and rising import costs. With more than 80% of Canadian-made vehicles exported to the U.S., even minor trade disruptions can quickly cascade into large-scale slowdowns.
Canada’s automotive economy depends heavily on:
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Cross-border trade with the U.S.
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Timely access to international auto parts
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Stable investment in manufacturing plants and workers
With no clear direction on exemptions for parts, Canadian operations are finding it difficult to forecast production targets or manage logistics efficiently.
Canadian industry groups warn that if the U.S. finalizes its upcoming tariff rollout without exceptions for North American parts, it could:
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Worsen auto part shortages
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Drive up costs for Canadian-produced vehicles
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Undermine competitiveness of Canada’s auto exports
The Canadian government is urging the U.S. to uphold the USMCA trade agreement, which was designed to support free and fair trade in North America. Ottawa has also hinted at potential countermeasures if Canadian-built vehicles or parts are unfairly penalized by new tariffs.
Canada’s auto industry sits at a crossroads, caught between international trade policy shifts and supply chain fragility. The coming days will be crucial, as both U.S. and Canadian leaders navigate this economic standoff — one that could reshape North America’s auto sector for years to come.