Key Takeaways
- The Canadian auto industry has faced a turbulent year due to uncertainties such as job changes, tariffs, and changing market conditions.
- The threat of U.S. tariffs on the auto sector has had a significant impact on the industry, with companies reporting billions of dollars in tariff hits.
- The federal government has paused plans to force car companies to hit minimum sales levels for electric vehicles, citing "extreme pressure" from Trump’s tariffs.
- Stellantis has scrapped plans to build the Jeep Compass at its assembly plant in Brampton, Ontario, and instead will build it in Illinois.
- General Motors has cut the third shift at its assembly plant in Oshawa, Ontario, resulting in job losses for around 750 employees.
Introduction to the Canadian Auto Industry
The Canadian auto industry has undoubtedly had a turbulent year, marked by uncertainties and challenges. The sector has been affected by job changes, tariffs, and changing market conditions, making it a difficult year for both auto workers and companies. One of the major factors that have contributed to this turbulence is the threat of U.S. tariffs on the auto sector. The tariffs, imposed by U.S. President Donald Trump, have had a significant impact on the industry, with companies reporting billions of dollars in tariff hits.
The Impact of Tariffs on the Auto Industry
The tariffs imposed by Trump have been a major challenge for the Canadian auto industry. The 25% levies on a broad range of Canadian products, which kicked in on March 4, have affected profits, jobs, and investment plans. The tariffs have also led to a significant amount of uncertainty, with companies struggling to keep track of which tariffs are in effect and how they work. Despite some relief provided by the exception for goods that comply with the existing trade deal between Canada, the U.S., and Mexico, known as CUSMA, the impact of the tariffs has still been severe. The steep aluminum and steel levies have also played a role in the challenges faced by the industry.
The Pause of the EV Mandate
In September, the federal government announced that it is putting plans to force car companies to hit minimum sales levels for electric vehicles on the backburner. The pause and review of the EV mandate are intended to relieve some of the "extreme pressure" automakers are feeling from Trump’s tariffs. The auto industry had been lobbying for the EV mandate’s repeal and applauded the move, saying consumers weren’t flocking to battery-powered cars as quickly as expected. Environmental activists, however, were less happy with the decision. The change came amid a broader turn away from car-related climate initiatives as consumer costs rose.
Stellantis’s Decision to Scrap Plans for the Jeep Compass
The news that Stellantis is scrapping plans to build the Jeep Compass at its assembly plant in Brampton, Ontario, sent shockwaves through the industry and political landscape. The global automaker revealed that it will instead build the Compass at an idled facility in Belvidere, Illinois, a decision widely derided in Canada as a move to appease Trump. The decision has left the roughly 3,000 workers in Brampton facing an uncertain future, with some even making the trip down to work at the Windsor plant as the company hires for a third shift there. Stellantis insists it’s looking for a solution, but federal officials have come out swinging, claiming the company violated the terms of its funding agreements with the government.
General Motors’ Decision to Cut the Third Shift in Oshawa
It was a similar story in Oshawa earlier this year, when General Motors announced plans to cut the third shift at its assembly plant in the southern Ontario city. The company said that the facility will "return to a two-shift operation in light of forecasted demand and the evolving trade environment." As a result, around 750 GM employees will lose their jobs, and 1,500 more workers from the surrounding supply chain are expected to be laid off, too. Meanwhile, the company is adding hundreds of workers to its plant in Fort Wayne, Indiana, which, like Oshawa, builds the Chevrolet Silverado.
Looking Ahead to the Upcoming Year
The upcoming year is shaping up to be another busy one in Canada’s auto sector. Not only is the CUSMA review quickly approaching, but Unifor’s collective agreements with the Big Three automakers (GM, Ford, Stellantis) also expire in September, setting up major contract negotiations before then. The industry will likely continue to face challenges and uncertainties, but it will also be an opportunity for companies and workers to adapt and evolve in response to changing market conditions. As the industry looks ahead to the upcoming year, it will be important to keep a close eye on the developments and how they impact the sector as a whole.