Open this photo in gallery: Stellantis’s Chrysler facility in Windsor, Ont. Earlier this month, Stellantis NV announced plans to produce the Jeep Compass in Illinois instead of Canada. Carlos Osorio/Reuters The federal government is cutting back on the number of tariff-free vehicles that Stellantis NV STLA-N and General Motors GM-N can bring in from the U. S. after these companies backed away from their promises to invest in Canada. A source from the government revealed that Stellantis’s quota for U. S.-assembled vehicles sold in Canada without tariffs will be reduced by 50 percent, while General Motors will face a 24.2 percent cut. is not naming the source as they are not authorized to speak publicly about this issue. Finance Minister François-Philippe Champagne stated on X Thursday night that he was “deeply disappointed by the recent production changes announced by General Motors and Stellantis.” He noted that lowering import quotas was “a clear consequence” under the government’s auto remission framework. On Tuesday, General Motors ceased production of the Chevrolet Bright Drop electric parcel van at its Ingersoll, Ont., facility, impacting over 1,100 hourly workers in that southwestern Ontario town. Earlier this month, Stellantis revealed it would move production of the Jeep Compass from its Brampton, Ont., plant to Illinois as part of a US$13-billion initiative aimed at increasing production within the United States. This decision left many of the 3,000 unionized workers already laid off at Brampton uncertain about their future. Opinion: Canada needs to start thinking about an auto sector without U. S. automakers Mr. Champagne also sent a letter to Kristian Aquilina, president and managing director of General Motors, expressing his worries regarding GM’s choice to go back on its investment commitments in Canada. He stated: “Should General Motors secure another mandate for Ingersoll, and vehicle production increase, the government will positively consider raising your remission quota volumes in the future.” Another letter addressed to Fiat Chrysler Automobiles Canada Chairman and President Jeff Hines similarly conveyed disappointment over Stellantis’ cancellation of its plans for Brampton production. Mr. Champagne mentioned that any review of remission quotas would only occur when Stellantis introduces new products at Brampton to boost vehicle output. “They were given a bonus – a different status because they’re manufacturing here,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. However, he noted, “What’s the point of bonusing someone to maintain their footprint if they’ve reneged on that covenant? It’s not an easy thing to do – it’s hard negotiation.” This action limits a crucial exemption allowing automakers to dodge a 25-percent retaliatory tariff on all American auto imports into Canada during ongoing trade tensions with the U. S. “When those two companies decided they were no longer going to produce vehicles in those two plants, we thought it was wise for the federal government to pull that bonus,” he said. “Those plants have been very profitable and productive for those companies and they’ve helped support entire communities,” said Mr. Volpe. The Carney government’s decision isn’t meant as punishment; rather it hopes these companies will reconsider their choices.
INDUSTRY MINISTER MELANIE JOLY PREVIOUSLY CALLED STELLANTIS’ PRODUCTION SHIFT “UNACCEPTABLE” IN AN OCTOBER 15 LETTER AND WARNED THAT THE AUTOMAKER HAD MADE LEGALLY BINDING COMMITMENTS TO MAINTAIN ITS CANADIAN FOOTPRINT IN EXCHANGE FOR FINANCIAL SUPPORT.
“ANYTHING SHORT OF FULFILLING THAT COMMITMENT WILL BE CONSIDERED AS DEFAULT UNDER OUR AGREEMENTS,” SHE WROTE ADDING THAT IF THE VEHICLE MAKER DID NOT FULFILL ITS OBLIGATIONS THE GOVERNMENT WOULD HOLD THE COMPANY TO FULL ACCOUNT INCLUDING THROUGH LEGAL ACTION.
MR. VOLPE ACKNOWLEDGED THAT THE AUTOMAKERS ARE LIKELY FACING “UNPRECEDENTED” PRESSURE TO MOVE PRODUCTION TO THE U. S. FROM THE WHITE HOUSE.
INDUSTRY WATCHERS PREVIOUSLY SAID STELLANTIS IS TRYING TO AVOID THE 25-PERCENT IMPORT TAXES FROM U. S. PRESIDENT DONALD TRUMP THAT COST U. S.-BASED AUTOMAKERS BILLIONS OF DOLLARS AND BUNGLED SUPPLY CHAINS BUILT ON DECADES OF FREE TRADE BETWEEN CANADA AND THE U. S.
BUT OTTAWA’S MESSAGE IS SIMPLE MR. VOLPE SAID IF A COMPANY CHOOSES TO MOVE PRODUCTION FROM CANADA TO THE U. S. THEY LOSE THEIR ELIGIBILITY FOR THOSE BENEFITS.
“I DON’T THINK THE COMPANIES SHOULD BE SURPRISED,” HE SAID.
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