GM, Stellantis to Lose Part of Canada Tariff Break After Job Cuts
(Bloomberg) -- General Motors Co. and Stellantis NV will be forced to pay tariffs on some US-made vehicles they import for sale in Canada, after the companies decided to reduce assembly-line work at factories in Ontario.
Canada put tariffs of as much as 25% on US-made cars and light trucks in April in retaliation for President Donald Trump’s levies on foreign vehicles. But Prime Minister Mark Carney’s government also carved out an exemption — known as “remission” — for automakers that make vehicles in Canada.
That exemption allowed auto companies to continue importing vehicles into Canada without paying tariffs, as long as they kept producing and investing in Canadian factories. But Stellantis will now see its quota of tariff-free vehicles slashed by 50% and GM will face a 24% reduction, according to a government official familiar with the matter, speaking on condition they not be identified because they were not authorized to speak publicly about it.
It’s an escalation of tension between Carney’s government and the automakers, which have been altering their manufacturing plans in response to Trump’s tariffs and changes in demand for electric vehicles.
GM announced this week it’s permanently ending electric van production in the town of Ingersoll, Ontario, casting doubt over the future of that plant, which doesn’t make any other model. Last week, Stellantis halted plans to make the Jeep Compass SUV at a factory near Toronto, putting 3,000 direct jobs at risk. The fate of that facility is also unclear.
The moves angered Canadian officials in part because Canada helped fund the bailout and restructuring of GM and Chrysler — now part of Stellantis — when they were in financial distress during the global financial crisis. Governments in Canada have continued to provide financial aid to both GM and Stellantis as an incentive to retool factories and keep making cars in the nation.
The government’s move to shrink the tariff break for Stellantis and GM was reported earlier Thursday by the Canadian Broadcasting Corp.
Both companies still have one operating assembly plant in southern Ontario, but most models they sell in Canada are imported — usually from the the US or Mexico. General Motors had 15.8% of the Canadian auto market in the first half of the year, making it the industry leader, the company said in July.
Canada is by far the largest export market for US-made new vehicles, buying about 629,000 last year, according to Commerce Department data.
General Motors didn’t immediately respond to a request for comment. A spokesperson for Stellantis said the company was working on a response.
(Updates with additional information, beginning in second paragraph.)
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