The federal government is hitting back at Stellantis and General Motors by cutting the number of duty-free vehicles the automakers can import from the U.S. to sell in Canada.
As first reported by CBC News, the two multinational manufacturers will no longer be exempt from paying Canada's retaliatory tariffs on as many U.S.-assembled vehicles as before.
The move is an attempt to pressure companies to reinvest in Canadian manufacturing and workers to recapture those benefits and avoid large tariff bills.
“These actions follow the automakers' unacceptable decision to reduce their manufacturing presence in Canada, which directly violates their commitments to the country and Canadian workers,” the government said in an overnight press release.
Ottawa's action comes after Stellantis announced its U.S. expansion plan, including moving production of the Jeep Compass from Brampton, Ontario, to Illinois.
General Motors also confirmed Tuesday that it is ending production of its BrightDrop electric vans at its Ingersoll, Ont., plant due to demand.
In April, the federal government offered auto companies an exemption from Canada's 25 percent retaliatory tariffs on the U.S. auto sector.
The federal government has announced that automakers will be allowed to import a certain number of U.S.-assembled vehicles—those that comply with CUSMA—without countermeasures imposed by Ottawa in response to Trump's tariffs.
But this advantage came with strings attached: automakers had to continue producing vehicles in Canada and complete already planned investments.
If companies violate this condition, the government has warned it will cut the number of duty-free cars they can import from the US.
Finance Minister Francois-Philippe Champagne and Industry Minister Mélanie Joly issued a joint statement saying Stellantis and GM had violated “their legal obligations to Canada.”
Ministers announced the government would immediately reduce the number of American-built vehicles GM can import duty-free by 24 percent, and cut the number of Stellantis by 50 percent.
“I think Canadians and the industry want the government to be tough on the companies that don't own these partnerships, which in many cases are worth billions,” said Flavio Volpe, president of the Automotive Parts Manufacturers Association.
“It's a great move.”
But Hugh Williams, national spokesman for the Canadian Automobile Dealers Association, says the government's response will hurt Canadian consumers.
“Vehicle prices will rise as tariffs increase,” Williams said.
“We've made it clear to the government that when your trading partner shoots you in the foot, don't pull out another gun and shoot yourself in the other foot.”
Trump is playing hardball
Unifor national president Lana Payne said she believes Ottawa's “carrot and stick approach” will work.
Payne said US President Donald Trump is now playing “hardball” and is “extorting corporations” to try to move manufacturing to the US.
“He's doing everything he can to surgically destroy our industrial economy in Canada, including the auto industry,” Payne told CBC. Power and politics.
“If we don't stand up to him and these companies, we will lose everything.”
Canadian politicians of all stripes have expressed anger and frustration over the move of Jeep Stellantis production from Brampton, Ontario, to Illinois, and Ottawa is considering legal action.
Jolie also threatened legal action against Stellantis, noting that the government gave her millions of dollars on the condition that the company keep its C.Anadian trail.
She wrote on social media Thursday that she had met with GM, the Ontario government and the union to discuss the next step for workers and that she expected an update in 15 days.
Ontario Premier Doug Ford has threeintends to sue GM if it breaks its contract and does not find a new product for the Ingersoll plant.
Prime Minister Mark Carney said Thursday that while GM has said it will meet its obligations to pay workers, that is not enough.
“We are not happy with this,” he said.
In a statement from Ford, Carney said they are working to figure out what else can be done with the GM plant and whether it could become part of Canada's upcoming defense industrial strategy. Carney is working on a plan to move Canada away from its overdependence on the United States.
Carney also pointed to ongoing negotiations with the Trump administration to try to get some parts of the economy relief from hits from U.S. tariffs.
The prime minister warned that if Canada doesn't make progress in those negotiations, the government will “do whatever is necessary to protect our workers.”
“It starts with building and taking control there. But that also doesn't mean unfair access to our market if we don't have access to another market,” Carney said. “We're in the wrong place.”
Reporters asked Prime Minister Mark Carney about his approach to trade negotiations with the United States, highlighting differences with the approach of Ontario Premier Doug Ford, who has advocated tougher handling of the Trump administration.
Trump has made it clear that he wants to dominate the auto industry. The White House has hit Canada's auto sector with a 25 percent tariff on all finished vehicles that do not comply with the Canada-United States-Mexico Agreement (CUSMA).
U.S. Commerce Secretary Howard Lutnick told an audience in Toronto this month that he wants to move auto assembly out of Canada.
Canada has been negotiating with the United States to reduce tariffs in the automotive sector. But Carney suggested Thursday that talks in Washington are now focused on trying to get relief for the steel and aluminum sectors, which were hit hard for the first time by Trump's taxes.
Conservative Leader Pierre Poilievre criticized Carney on Thursday morning, saying he had broken his promise to negotiate a victory with Trump and protect Canada's auto sector.
“We need him to actually keep his promise to protect auto workers in his negotiations with the Americans,” Poilievre said.
Stellantis and GM have not yet responded to CBC News' requests for comment.
The Trump administration is examining whether auto imports threaten national security.
