Canada, South Korea Sign New Industrial Pact to Deepen Trade and Boost Auto, Clean Energy Sectors

Canada and South Korea have taken a significant step toward strengthening bilateral trade and industrial cooperation, as both countries look to reduce economic vulnerabilities caused by global trade tensions and rising U.S. tariffs.

On Tuesday, Canada’s Industry Minister Melanie Joly met with senior representatives from South Korea in Ottawa, where the two sides signed a new memorandum of understanding (MOU). Details of the agreement were made public in a government press release issued Wednesday.

At the centre of the deal is the creation of a Canada–Korea Industrial Cooperation Committee, a joint body that will coordinate collaboration in key growth areas described as “future mobility.” According to the release, this includes efforts to establish a stronger Korean automotive manufacturing presence in Canada, with electric vehicle (EV) production identified as a major opportunity. However, no investment figures or timelines were disclosed.

The agreement also names artificial intelligence as a strategic sector for cooperation, though officials have yet to outline how the two countries plan to work together in this field.

Beyond automotive manufacturing, the MOU places strong emphasis on battery supply chains and critical minerals. Areas of cooperation include battery production, materials processing and refinement, as well as recycling and critical minerals processing sectors that are increasingly vital to the global clean energy transition.

Canada’s Minister of Energy and Natural Resources, Tim Hodgson, said the agreement will also help expand Canadian exports to South Korea, describing the move as part of a broader effort to diversify trade beyond the United States.

“This memorandum of understanding reflects Canada’s strategic approach to building a secure, competitive and sustainable energy future,” Hodgson said in the release. “By deepening cooperation on critical minerals, clean energy technologies and energy security, we are diversifying our exports and strengthening resilience on both sides of the Pacific.”

Critical minerals are a central pillar of Ottawa’s Budget 2025, with Canada possessing large reserves of nickel, cobalt, graphite and lithium materials essential for batteries, energy storage systems, wind turbines and other green technologies. The International Energy Agency has estimated that global demand for such minerals could rise as much as sixfold by 2040 as countries move away from fossil fuels.

Government officials say partnering with South Korea will help reinforce Canada’s automotive and clean energy supply chains while supporting long-term energy security. The collaboration is also expected to generate well-paying jobs across Canada, though no estimates on employment numbers have been released.

“Canada is an auto nation and home to world-class workers and cutting-edge innovation,” Joly said. “This agreement positions us to lead in the next generation of automotive excellence by deepening cooperation in EV and hydrogen mobility and expanding battery and critical mineral partnerships.”

While the release did not name specific companies, South Korea is home to major global automakers such as Hyundai Motor Group, which also oversees the Kia and Genesis brands companies that could potentially benefit from deeper industrial ties with Canada.

The new MOU underscores Canada’s broader strategy to seek reliable trade partners and strengthen domestic industries as global economic pressures continue to reshape international commerce.