Canada Cuts GM, Stellantis Tariff Quotas Ahead of USMCA Review

Canada reduced tariff-free import quotas for General Motors and Stellantis following their withdrawal of manufacturing investments in Ontario, a move that heightens trade tensions with the United States ahead of the scheduled review of the United States-Mexico-Canada Agreement (USMCA). The policy links trade access to domestic production commitments and signals a shift in Canada’s approach to automotive policy in North America.

The Department of Finance of Canada stated that GM’s annual remissions quota will be reduced by 24.2%, while Stellantis will face a 50% reduction due to unmet investment and production commitments at facilities in Oshawa and Ingersoll (GM) and the cancellation of assembly operations in Brampton (Stellantis). Finance Minister François-Philippe Champagne said, “These decisions are unacceptable and violate their legal obligations to Canada and Canadian workers.”

The measure is part of a conditional tariff remission system announced in April 2025, which allows Canada to impose tariffs of up to 25% on US-built vehicles if companies fail to meet USMCA rules or domestic production agreements. The program offered exemptions for companies that maintained manufacturing operations in Canada and complied with planned investment projects. According to the Canadian government, GM and Stellantis no longer meet these conditions.

Prime Minister Mark Carney said, “This is not only about unfulfilled agreements but about protecting Canadian industrial capacity. We will not allow unfair access to our market while we face barriers to enter the US market.” Stellantis shifted Jeep Compass production to Illinois, and GM halted production of BrightDrop electric vans in Ingersoll, citing demand adjustments. Industry Minister Mélanie Joly added, “These companies have received billions in public support. They cannot turn their backs on the country that financed them.”

Trade tensions escalated on Oct. 23 when Donald Trump announced via social media that the United States would cancel bilateral trade talks with Canada. The announcement followed criticism in Ontario over US tariffs on Canadian exports. Two weeks earlier, Carney had met Trump in Washington to negotiate tariff relief on steel and aluminum exports.

Carney, departing for a nine-day trade mission in Asia, said, “We cannot control US trade policies, but Canada is ready to continue negotiations when there is real willingness.” He added that Canada will accelerate commercial diversification with Asian markets to reduce dependency on the United States in automotive, strategic minerals, and advanced manufacturing. “We can build new alliances. This is not only about resistance but restructuring our growth strategy,” he said.

Analysts noted that the dispute could reshape the regional structure of the North American automotive supply chain and increase pressure on manufacturers to relocate production to markets offering incentives or tariff protection. The situation introduces uncertainty into USMCA compliance enforcement and could shift production decisions toward Mexico, which has avoided direct trade conflict in the current dispute.

The Canadian government has not indicated whether further actions will target other automotive groups operating in the country. GM and Stellantis have not announced changes to their investment plans in Canada since the tariff quota decision.