Auto makers say tariffs are costing them billions and warn of steeper losses ahead

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In addition to the impacts of layoffs on Canadian workers, the move could have another effect: Canada created a “duty remission” scheme that allowed automakers to import vehicles from the U.S. duty free, based on the number of vehicles produced here.

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The shift change could reduce GM’s production in Canada by one-third. Jennifer Wright, a GM spokesperson, said the federal government is well aware of the impending shift reduction, but could not say how it would affect its duty remission allowance, not least because Carney is hoping to reach a trade agreement before that.

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The situation shows how automakers are seeking to reconfigure cross-border operations to mitigate their tariff exposure.

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Wright noted that in 2024, GM sold 294,000 vehicles in Canada, which were produced in South Korea, Mexico, the U.S., and Canada. Now, tariffs create incentives to disentangle global supply chains.

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“The auto sector has been designed in the last few years to be a very integrated market,” said Wright. “That was the point of free trade.”

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GM said on its earnings call on Thursday that it expects tariffs to take US$4 billion to US$5 billion out of its earnings for 2025.

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So far, the company has posted strong sales in Canada in 2025, showing an eight per cent year-over-year increase in the second quarter. But Wright also said sales surged before tariffs took effect and she expects to see a softening as the year progresses.

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Meanwhile, Stellantis earlier this year indefinitely paused a multibillion dollar overhaul of its assembly plant in Brampton, Ont., which was being retooled so it could produce battery-electric, hybrid or internal combustion engine Jeeps, depending on market demand.

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At its Windsor, Ont., plant, the company continues to produce hybrid and internal combustion engine Chrysler Pacifica minivans, and battery-electric Dodge Chargers, but it has temporarily paused operations twice this year since tariffs were announced.

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Earlier this year, the company estimated that tariffs could cost it more than $2 billion. But the company is also battling sluggish sales, and shipments within North America fell 25 per cent in the first quarter of the year.

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Kingston, of the CVMA, said that overall he expects vehicle sales in all of North America to drop by roughly 10 per cent in 2025.

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Although Carney has set an Aug. 1 deadline for a trade deal, Kingston called it an “optimistic scenario.” Nonetheless, he said it is vital to the health of his industry to resolve the trade war quickly.

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“The U.S. trade policy is doing significant damage to American automakers,” Kingston said. “We need a resolution and we need it quickly.”

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