Canada has decided to reduce trade benefits to Stellantis NV and General Motors Co. after both automakers scaled back manufacturing contracts in Ontario. Canada’s Treasury Department announced Thursday that it would cut Stellantis’ duty-free import allowance by 50% and GM by 24.2%.
Ottawa’s automatic exemption framework allows vehicles assembled in the U.S. to enter Canada duty-free as long as automakers maintain local production. Finance Minister Philippe Champagne said the decision to lower the tariff-free rate reflects the government’s disappointment with GM’s recent decision to halt domestic production of its Brightdrop electric delivery van and Stellantis’ decision to discontinue production of its Jeep Compass in Canada. He added that this is an unacceptable decision given the legal obligations signed to Canada and Canadian workers.
Ottawa tightens tariff rules for Stellantis and GM
Earlier this month, Stellantis announced it would move production of the Jeep Compass from Brampton, Ontario to Belvidere, Illinois as part of a $13 billion plan to expand domestic production. car manufacturer revealed The plan will fund the launch of five new vehicle models, the development of a new four-cylinder GMET4 EVO engine, and the creation of 5,000 new jobs across Illinois, Michigan, Ohio and Indiana.
Our government is deeply disappointed in the production changes recently announced by General Motors and Stellantis. Therefore, we are reducing their import exemption quota. This is an obvious result under our established framework. We stand firmly behind autoworkers and will continue to… pic.twitter.com/ZHvuqXfgyL
— Francois-Philippe Champagne (FPC) 🇨🇦 (@FP_Champagne) October 24, 2025
Stellantis CEO Antonio Filosa confirmed that the initiative will increase U.S. production capacity by 50% and support additional models through 2029. Approximately 3,000 unionized employees lost their jobs due to the decision to move production to the United States.
General Motors has ended production of its Brightdrop electric van due to lower than expected demand for its commercial EV line. At least 1,100 hourly workers were affected. In effect, the government considered this decision to be a breach of contract made under the automatic exemption framework. Automotive Industry Minister Mélanie Joly said the government was prepared to take legal action if Stellantis did not meet its commitments.
in letter Mr. Joly warned Stellantis that the automaker had made legally binding promises and that failure to deliver on those promises would be considered a default. He added that Ottawa will hold automakers legally accountable.
Flavio Volpe, president of the Automotive Components Manufacturers Association, supported the government’s decision and pointed out that there is no point in giving bonuses to those who break their promises to maintain their footprint. He described the decision as a way to remind automakers that incentives come with expectations and setbacks.
Canada retaliates, pressuring automakers over President Trump’s reshoring push
President Donald Trump’s reshoring policies are putting pressure on companies to expand production in the U.S. by prioritizing domestic car manufacturing and imposing stiff fines on imported goods. U.S. tariffs of up to 25% on non-compliant vehicles are helping change decision-making for businesses across North America.
GM’s decision highlights the growing trend among battery and EV manufacturers to scale back production in response to slumping demand for EVs. Cryptopolitan reported Recently, Dan Inc. also closed its operations for the same reason. Dana’s closure resulted in approximately 200 employees being laid off. In the US, the main reason for the weak demand is that the tax credit for EVs expired on September 30th. Dana’s exit from the market appears to be paying off across the industry, although Chinese rivals such as BYD appear to be catching up.
The policy changes by the Canadian government reflect the fragile balance of Canada’s auto industry. Champagne sent a letter to GM President Christian Aquilina saying it may reconsider the remission quota. The finance minister noted that the exemption will be reconsidered if GM secures new authority for Ingersoll and increases vehicle production. He added that similar conditions apply to Stellantis, with quotas restored only if it launches a new production line in Canada.
The government’s decision effectively removes trade incentives despite 25% retaliatory tariffs imposed last year amid heightened tensions over the United States-Mexico-Canada Agreement (USMCA).
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