The move follows decisions by several automakers to scale back production in Canada.

The federal government is pushing back against Stellantis and General Motors, cutting the number of duty-free vehicles they can import from the United States for sale in Canada.

As first reported by CBC News, the two multinational automakers will no longer enjoy previous exemptions from Canada’s retaliatory tariffs on U.S.-made vehicles.

The measure is intended to pressure the companies to reinvest in Canadian production and jobs, in order to restore those benefits and avoid hefty import duties.

“This action follows the automakers’ unacceptable decision to reduce their production footprint in Canada, directly violating their commitments to the country and to Canadian workers,” the government said in a late-night statement.

Ottawa’s move comes after Stellantis announced plans to expand operations in the United States, including shifting Jeep Compass production from Brampton, Ontario, to Illinois.

• Ottawa has threatened legal action against Stellantis over the conversion of its Brampton plant.

• Stellantis scrapped plans to produce Jeep models in Ontario, opting instead to move production to the U.S.

  
  

General Motors also confirmed Tuesday that it will halt production of its BrightDrop electric delivery vans at its Ingersoll, Ontario plant due to weak demand.

In April, the federal government granted automakers a temporary exemption from Canada’s 25% retaliatory tariff on vehicles from the U.S.

However, the exemption came with conditions: automakers had to maintain Canadian production and fulfill previously announced investment plans.

If they failed to do so, the government warned it would reduce the number of vehicles they could import duty-free from the United States.

Finance Minister François-Philippe Champagne and Industry Minister Mélanie Joly said in a joint statement that Stellantis and GM have violated their legal obligations to Canada.

• Before Stellantis revealed its U.S. expansion plan, Ottawa had already provided the company $105 million to support its Ontario plant.

• Bank of England Governor Mark Carney said Stellantis is “looking for a new model” to fill the gap left at its Brampton facility.

  
  

The ministers announced that the government will immediately cut GM’s duty-free U.S. import quota by 24% and reduce Stellantis’s quota by 50%.

“I think Canadians and the industry expect the government to take a firm stand against companies that fail to recognize the value of multi-billion-dollar partnerships,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
“This is a brilliant move.”

However, Huw Williams, national spokesperson for the Canadian Automobile Dealers Association, said the government’s actions will ultimately hurt Canadian consumers.

“The higher the tariffs, the higher the car prices,” Williams said.
“We’ve made it clear to this government that when your trading partner shoots itself in the foot, pulling out another gun to shoot your own is not a good idea.”

Trump's Hardline Approach

Unifor National President Lana Payne said she believes Ottawa’s “carrot-and-stick” approach will work.

Payne noted that U.S. President Donald Trump is currently taking a hardline stance, “strong-arming companies” to shift production to the U.S.

“He’s doing everything he can to destroy Canada’s industrial economy — including the auto sector,” Payne told CBC’s Power & Politics.
“If we don’t push back hard against him and these corporations, we’ll lose everything.”

Minister Mélanie Joly also threatened legal action against Stellantis, noting that the company received millions in government support on the condition that it maintain operations in Canada.

On Thursday, she posted on social media that she had met with GM, the Ontario government, and union leaders to discuss next steps for workers, adding she expects an update within 15 days.

Ontario Premier Doug Ford warned he will sue GM if the company breaches its contract and fails to find a new product for the Ingersoll plant.

• Lawmakers have urged Stellantis to honor its commitments to Brampton autoworkers.

• Stellantis recently announced $13 billion in new U.S. investments, expected to create more than 5,000 jobs.

  
  

Prime Minister Mark Carney said Thursday that while GM has pledged to continue paying its workers, “that’s not enough.”

“We’re not satisfied,” he said.

In a joint statement with Ford Motor Company, Carney said the government is exploring how GM’s facilities could be repurposed and whether they might play a role in Canada’s forthcoming defense industrial strategy. Carney has been working on a plan to reduce Canada’s overreliance on the U.S.

He also confirmed that Ottawa is in talks with the Trump administration to secure sector-specific exemptions from U.S. tariffs.

“If we don’t make progress in these negotiations, the government will take every necessary step to protect our workers,” Carney warned.
“It all starts with building — and with controlling the market. But if others won’t play fair, we can’t allow unfair access to ours. We’re not there yet.”

Trump has made clear his ambition to dominate the automotive industry. The White House has maintained a 25% tariff on Canadian-built vehicles that don’t comply with the CUSMA (Canada-U.S.-Mexico Agreement) rules.

U.S. Commerce Secretary Howard Lutnick said in Toronto earlier this month that he hopes to shift vehicle assembly operations out of Canada.

Canada has been negotiating with Washington to reduce automotive tariffs, but Carney said talks currently focus on securing relief for the steel and aluminum sectors, which have been hardest hit by Trump’s tariffs.

Conservative leader Pierre Poilievre on Thursday morning criticized Carney, accusing him of failing to deliver on his promises to negotiate successfully with Trump and protect Canada’s auto industry.

“We need him to keep his word and stand up for Canadian autoworkers in talks with the Americans,” Poilievre said.

Stellantis and General Motors have not yet responded to CBC News’ requests for comment.