The Canadian government will allow automakers to circumvent retaliatory tariffs to continue importing US-assembled vehicles if the companies keep making cars in Canada.
Canada began taxing imports of US-made vehicles and parts on 9 April at a 25pc rate in response to a similar tariff the US had implemented. Canada's tariff on vehicle imports from the US will not apply to car companies that keep their Canadian plants running, the country's finance minister said this week.
The measure attempts to prevent closures of auto plants and layoffs in the Canadian automotive sector that the US tariffs threaten to cause.
Automaker Stellantis paused production at its Windsor, Ontario, assembly plant in early April to evaluate the US tariff on vehicle imports. The plant will re-open on 22 April, Stellantis said.
General Motors also plans to reduce production of its electric delivery fan at its Ingersoll, Ontario plant. The slowdown will result in layoffs of 500 workers, the Unifor union said.
The automotive industry in the US, Canada and Mexico has struggled to adapt its supply chains to the new tariffs because the US, Canada Mexico free trade agreement (USMCA) and its predecessor helped establish an interconnected North American auto sector.
In another measure, companies in Canada will get a six-month reprieve from tariffs on imports from the US used in manufacturing, food and beverage packaging. The six-month relief also applies to items Canada imports from the US used in the health care, public safety and national security sectors.
"We're giving Canadian companies and entities more time to adjust their supply chains and become less dependent on US suppliers," finance minister Francois-Philippe Champagne said in a statement.
