Canada's Department of Finance launched consultations on 27 February 2026 to strengthen the country's automotive remission framework, aiming to incentivise domestic production and investment while protecting over 500,000 workers in the sector. The initiative, part of a broader strategy announced on 5 February 2026, seeks to position Canada as a global leader in electric vehicle production and align trade policy with industrial objectives, with stakeholder feedback due by 13 April 2026.
Canada’s Department of Finance, in a news release on 27 February 2026, announced that it launched consultations on potential ways to strengthen Canada’s automotive remission framework by further incentivising companies to produce and invest in Canada, ensuring Canada remains a global powerhouse for automotive manufacturing.
The changes considered could help to better align trade policy with Canada’s industrial and workforce objectives. By protecting Canadian workers and communities, these measures will strengthen supply chains and solidify Canada’s positioning as a destination of choice for automotive investment in a rapidly evolving global industry.
These consultations are part of the new strategy to transform Canada’s auto industry, announced by the Prime Minister on February 5, 2026. This strategy incentivises the production of made-in-Canada vehicles, harnesses the country’s world-class capabilities in artificial intelligence and technology expertise to build the cars of the future, and positions Canada to become a global leader in electric vehicle (EV) production.
Vehicle assemblers, parts producers, importers, workers’ associations, unions, and other interested parties are invited to submit their feedback on potential changes to Canada’s automotive tariff remission framework for surtaxes applicable to passenger vehicles made in the US by 13 April 2026.
- Canada’s auto sector supports over 500,000 workers, contributes over CAD 16 billion annually to Canada’s GDP, and is one of the country’s largest export industries. In 2025, Canada produced over 1.2 million passenger vehicles.
- With over 90% of Canadian-made vehicles and 60% of Canadian-made parts exported to the US, US automotive tariffs are threatening Canada’s automotive manufacturing industry.
- The government maintains counter-tariffs on imports of passenger vehicles made in the US to ensure a level playing field for Canadian automotive manufacturers in the domestic market.
- Since April 2025, Canadian-made vehicles have faced a 25% US tariff on non-US content (the value of US content in CUSMA-compliant vehicles is exempt).
- Under the current auto remission framework, companies that produce in Canada are able to import US -made vehicles tariff-free, up to a quota, provided they maintain production levels and follow through on planned investments in Canada.
