The Canadian auto industry is at a crossroads — and not just because of shifting technologies and consumer demand. It’s under siege from aggressive U.S. trade policy, facing steep tariffs and a future that’s being shaped more by political gambits than strategic planning. As Prime Minister Mark Carney sat down with Detroit’s Big Three automakers this week, the central question wasn’t just about building more cars in Canada — it was about whether Canada’s auto sector can survive this political and economic storm intact.
To recap: the U.S. has slapped a crushing 25 per cent tariff on Canadian-made vehicles, with a 50 per cent duty on steel and aluminum — critical materials that go into every car, truck, and SUV. These measures, pushed by President Donald Trump, are part economic nationalism, part electioneering. And despite retaliatory countermeasures from Canada, the pain is being felt, especially in Ontario, where 35,000 manufacturing jobs were lost in April alone.
Let that sink in. Thirty-five thousand jobs. Gone.
This is not just a temporary blip. Ontario’s financial watchdog has already warned of a “modest recession” in the province — and the ripple effects could last well into 2026. The only buffer so far has been the strength of Toyota and Honda’s operations, who say no jobs have been lost yet. But even they admit that if the tariffs remain, the risk grows.
Meanwhile, there’s another storm quietly brewing — Canada’s own zero-emission vehicle (ZEV) mandate. Set under the previous Liberal government, the goal is for all new light-duty vehicles sold to be electric by 2035. Ambitious? Yes. But increasingly, it looks like wishful thinking.
Electric vehicle sales in Canada dropped from 16.5% of new vehicles sold in Q4 2024 to just 8.7% in Q1 2025. Why the dramatic fall? One key reason is that the federal government scrapped the EV rebate program — up to $5,000 per vehicle — back in January. Promises to reinstate some form of consumer incentive are vague at best.
So we’re pushing for 100% EV sales, but not making them affordable. That’s not policy — it’s a disconnect.
Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association, said it best going into the meeting with Carney: the current targets and policies are “not sustainable.” And he’s right. You can’t electrify an entire fleet of vehicles on good intentions alone.
To make matters worse, Toyota and Honda — responsible for 70% of Canada’s vehicle production — weren’t even invited to the meeting with the Prime Minister. That’s a troubling signal. While the Big Three dominate headlines, it’s Toyota and Honda that are carrying much of the weight in real production numbers. Leaving them out of the conversation is not just a snub — it’s bad strategy.
Their long-term commitment to Canada deserves more than a footnote in policy discussions. As David Adams of Global Automakers put it, these companies shouldn’t be “taken for granted.”
There is still time to course-correct. A trade deal with the U.S. is being targeted for July 21. If Carney can secure a fair agreement that eliminates or significantly reduces tariffs, it will be a massive win for Canadian workers and manufacturers. But that can’t be the end of the conversation.
Canada needs a comprehensive strategy — one that includes all automakers, revives consumer incentives for EVs, invests in domestic supply chains, and adapts mandates to the reality on the ground.
Carney’s meeting was a good start. But a meeting isn’t a solution — and the clock is ticking.
