Canada cuts tariff relief on some US cars due to Stellantis, GM ending some Canadian production

Key Points

• The Canadian government has decided to limit tariff-free vehicle imports for Stellantis and GM following their reduction in production in Canada.
• Stellantis is shifting production of its Jeep Compass from Canada to the U.S., while GM is discontinuing production of its BrightDrop electric vans in Ontario.
• As a result of these production cuts, Canada will reduce the tariff exemption quotas by 24% for GM and 50% for Stellantis.
• This development raises concerns for Canada's auto sector, which directly employs 125,000 Canadians and is a significant part of the country's economy.

TORONTO (AP) — The Canadian government is limiting how many vehicles Stellantis and GM can import tariff free after the automakers ended some production in Canada, a government official said Thursday.

The official said the companies will no longer be eligible to get the full break on Canadian countertariff duties on autos and auto parts. The official spoke on condition of anonymity as they were not authorized to speak publicly about the matter.

Stellantis said earlier this month it was moving planned production of its Jeep Compass from Canada to the U.S. And General Motors this week announced it will end production of BrightDrop electric vans in Ontario.

President Donald Trump has been urging the Big 3 American automakers to move production to the U.S.

Fear has spread in Ontario over what will happen to Canada’s auto sector. Autos are Canada’s second-largest export and Prime Minister Mark Carney has noted the sector employs 125,000 Canadians directly and almost another 500,000 in related industries.

In April, the government imposed retaliatory tariffs on certain U.S. goods, but carved out exemptions for some automakers to bring specific numbers of vehicles into the country, known as remission quota.

Ottawa said accessing this tariff-free quota came with terms requiring each company to maintain Canadian jobs and investment, and both companies have announced cuts in recent weeks.

Ottawa is reducing the exemption quota for General Motors by 24%, and is doing the same for Stellantis by 50%

Tensions between the neighbors and longtime allies have eased slightly in recent months as Carney tries to get a trade deal with Trump, but tariffs are taking a toll, particularly in the aluminum, steel, auto and lumber sectors.