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Canada Turns to Asia as Trump Tariffs Crush Detroit Auto Jobs
Canada assembled just 1.2 million vehicles last year, down from 2.3 million a decade ago, and the Detroit Three now account for only 23% of that shrinking output — down from 56% in 2016. With GM’s CAMI plant shuttered, Stellantis pulling the Jeep Compass to Illinois and Ford’s Oakville retooling delayed until 2027, Ottawa has responded by courting Chinese EV makers, slashing tariffs on BYD and Chery imports from 100% to 6.1%, and designing an import-credit system that rewards manufacturers who actually build in Canada.
The Trillium Report: Japan Fills the Gap
The structural shift is laid bare in a February 2026 report from the Trillium Network for Advanced Manufacturing, a think-tank based at Western University in Ontario. Honda and Toyota produced 77% of all vehicles assembled in Canada in 2025, up from 44% a decade earlier, and accounted for roughly 60% of assembly-plant employment by end-2024 (CBC, 2 February 2026). In 2016, four manufacturers — FCA (now Stellantis), GM, Honda and Toyota — each produced more than 400,000 vehicles annually in Canada. By 2025, only the two Japanese firms still held that distinction. Honda and Toyota each individually out-produced Ford, GM and Stellantis combined in both 2024 and 2025 (Trillium Network).
Trillium’s managing director Brendan Sweeney framed the decline bluntly: the Detroit automakers exploited their historical reputation while quietly shifting production elsewhere. The report recommends Ottawa leverage Canada’s buying power — 1.9 million vehicles purchased in 2025, far exceeding the 1.2 million produced — to secure manufacturing commitments, and reward firms that have consistently invested in Canadian operations rather than those that have idled plants and shed workers.
Three Plants, Three Retreats
The Detroit Three’s Canadian withdrawal has accelerated sharply since Trump reimposed 25% tariffs on imported vehicles. GM ended BrightDrop electric delivery van production at its CAMI Assembly plant in Ingersoll, Ontario, on 21 October 2025, cutting more than 1,000 jobs. The facility, retooled in 2021 at a cost of C$2 billion — roughly C$500 million from federal and provincial governments — had been projected to produce 50,000 vans annually but managed just 4,751 sales across North America through Q3 2025 (CBC, 21 October 2025). Ontario Premier Doug Ford threatened to sue GM for breaching its contract. GM is now in discussions with Belgium’s Dumarey Group about a potential sale of the facility (GM Authority, January 2026).
Stellantis pulled planned production of the Jeep Compass from its Brampton Assembly plant to Belvidere, Illinois, leaving all 3,200 workers on indefinite layoff. Industry Minister Mélanie Joly has accused both GM and Stellantis of breaking commitments made when they accepted government funding, and has threatened to recover public investment. At Ford Oakville, the planned shift to electric vehicle production — originally scheduled for 2025 — has been postponed twice. Ford now plans to retool for gasoline-powered pickup trucks, with production not expected to resume until 2027 (Trillium Network; Globe and Mail).
Ottawa’s China Gambit
In January 2026, Prime Minister Mark Carney flew to Beijing with Joly and signed what he described as a new strategic partnership. The centrepiece: an annual quota of 49,000 Chinese-made electric vehicles entering Canada at a 6.1% tariff, replacing the 100% duty imposed during the Biden era in 2024. The quota rises to 70,000 by 2031, and half of imports must be priced below C$35,000 within five years. Chinese automakers must establish joint ventures for vehicles or batteries in Canada within three years. In exchange, China agreed to reduce tariffs on Canadian canola, with further agricultural reductions under discussion (Globe and Mail; The Pointer).
Joly confirmed meetings in Beijing with BYD — which surpassed Tesla in global pure-EV sales in 2025 with 2.26 million units — and Chery Automobile, which has set a 2026 group sales target of 3.2 million vehicles across five brands. Recruiters working on Chery’s behalf have already begun contacting Canadian auto industry professionals on LinkedIn about roles supporting the company’s expansion (Globe and Mail, 27 January 2026). J.D. Power Canada estimates Chinese EVs could arrive at prices 10–15% below comparable Canadian models.
The backlash was immediate. Ontario Premier Doug Ford initially called Chinese cars “spy vehicles” and demanded a boycott, though he softened his stance after meeting Carney. Trump posted on Truth Social that Canada would not become a “Drop Off Port” for Chinese goods entering the US, and Commerce Secretary Howard Lutnick warned the deal could jeopardise USMCA renegotiations. Unifor, representing Canadian autoworkers, cautioned that allowing state-backed Chinese manufacturers greater market access could further undermine domestic competitiveness.
Import Credits: Manufacture Here or Pay
Alongside the China deal, Carney’s government introduced a new automotive strategy built around import credits. The mechanism is straightforward: automakers that manufacture vehicles in Canada earn credits that can offset tariffs on their imports, or be sold to competing companies. Honda and Toyota, as the two largest domestic producers, stand to benefit most. For GM — which sold approximately 300,000 vehicles in Canada last year but imports the vast majority from the US and now operates just one Canadian assembly plant producing Chevrolet pickup trucks — the system functions as a penalty for disinvestment (Bloomberg, 17 February 2026).
Brian Kingston, CEO of the Canadian Vehicle Manufacturers’ Association representing the Detroit Three, urged Carney to prioritise negotiating trade peace with Washington rather than implementing retaliatory measures. Ottawa is also pursuing Korean manufacturers: the federal government signed a memorandum of understanding with South Korea aimed at advancing a Korean automotive footprint in Canada, noting that 12% of vehicles sold in Canada in 2024 — approximately 228,000 units — were made by South Korean automakers (Plant Magazine; Canadian Auto Dealer).
The Structural Mismatch
The numbers expose a fundamental vulnerability. Canada buys 1.9 million vehicles a year but builds only 1.2 million — and the gap is widening as Detroit retreats. The Japanese manufacturers have shown consistent investment and steady employment, but they cannot alone replace the volume or the supply-chain depth once anchored by the Big Three. The Chinese EV gambit offers scale but carries political risk from Washington and from domestic unions. The Korean MOU is aspirational but unproven.
What is not in dispute is the direction of travel. As Trillium’s Sweeney told CBC: the decline has been 25 years in the making. Trump’s tariffs did not cause the structural shift — but they removed the last reasons for the Detroit Three to maintain a Canadian manufacturing presence they had already been hollowing out for a generation.
Sources: Koreatimes, Financialpost, Asiatimes
