Canada has reduced tariff-free import quotas for car manufacturers Stellantis and General Motors (GM) in response to their decision to scale back production in the country. The Canadian finance ministry announced that the annual quota eligible for tariff relief would be reduced by 24.2 percent for GM and 50 percent for Stellantis.
The move comes after both companies announced plans to shift production away from Canada. Stellantis, the European automaker, plans to move production of the Jeep Compass from Ontario to Illinois in the US Midwest. GM, on the other hand, has decided to abandon production of BrightDrop electric delivery vans in Canada, citing insufficient demand.
Canadian Finance Minister Francois-Philippe Champagne expressed disappointment with the two companies, stating that their decisions were “unacceptable” and in contravention of their legal obligations to Canada and its workers. The minister emphasized that the government would take strong action to protect the auto industry, which employs approximately 125,000 people, mostly in Ontario.
The Canadian auto industry has faced challenges in recent years, particularly due to US tariffs imposed under former President Donald Trump’s trade policies. These tariffs have impacted Canada’s car manufacturing sector and strained relations between the two North American neighbors. In 2022, Canada produced around 1.3 million cars, with 1.1 million of those vehicles being exported to the United States.
The reduction in tariff-free import quotas is seen as a measure to encourage car manufacturers to maintain production in Canada. The government has made it clear that it will not hesitate to take action to protect the industry, which is a significant contributor to the country’s economy. With the auto sector employing thousands of workers, the Canadian government is keen to ensure that manufacturers fulfill their obligations and continue to produce vehicles in the country. The decision to reduce tariff-free import quotas is a clear indication of the government’s commitment to safeguarding the industry and its workforce.