Carney Stakes Canada’s Auto Future on E.V.s as It Pulls Away From the U.S.

 

Carney Stakes Canada’s Auto Future on E.V.s as It Pulls Away From the U.S.

 

Prime Minister Mark Carney announced several measures Thursday aimed at making Canada a global leader in electric vehicles and rescuing an industry ravaged by U.S. trade policy.

 

Ian AustenJack Ewing

By Ian Austen and Jack Ewing

Ian Austen reported from Ottawa, and Jack Ewing from New York

https://www.nytimes.com/2026/02/05/world/canada/carney-canada-electric-vehicles-trump-trade.html

Feb. 5, 2026

 

Prime Minister Mark Carney of Canada announced on Thursday a sweeping plan to offer billions of dollars in incentives and tax breaks for auto industry investment designed to help turn Canada into a global leader in electric vehicles.

 

The new policies, Mr. Carney said, were meant to transform Canada’s economy and make it less reliant on a single trade partner after President Trump’s economic assaults and threats on Canada’s sovereignty have frayed relations between the two nations.

 

“We must take care of ourselves,” Mr. Carney told reporters at an auto parts factory near Toronto. “We cannot control what others do.”

 

Canada’s auto industry, which employs about 125,000 workers, is vital to the country’s economy and is closely intertwined with the United States. Mr. Carney’s effort to stake the country’s future to electric vehicles is part of his campaign to stand up to the United States, which has won him plaudits at home and abroad.

 

“Canada is an auto nation, the auto industry is central to our story,” Mr. Carney said. “The auto industry is the core pillar of the Canadian economy.”

 

Mr. Trump has inflicted significant pain on Canada’s auto industry, which exports about 90 percent of its vehicles to the United States, imposing a 25 percent tariff on Canadian vehicles. Mr. Trump has said he does not want cars sold in the United States to be made in Canada and wants to drastically increase domestic production.

 

But Mr. Trump’s dismantling of the trade policies that have knitted together the North American auto industry has led to a sense of urgency for Canada to look for alternative markets and strategies.

 

Canada’s plan aligns the country with a shift to electric vehicles that is well underway in Europe and China. But Mr. Trump and Republicans in Congress are doubling down on vehicles powered by fossil fuels, eliminating incentives that encouraged people to buy electric vehicles.

 

Canada is a relatively small market for U.S. automakers, but it is a major supplier of components and finished vehicles. The biggest danger for U.S. automakers may be that they are becoming increasingly isolated from foreign markets and disconnected from technological trends sweeping the rest of the world.

 

Most auto executives expect electric vehicles to eventually become the dominant technology in the United States, even if that shift takes longer than elsewhere.

 

“I see this as Carney showing the leadership that the U.S. should be showing the world right now,” said John Helveston, a professor in the engineering department at George Washington University. “I see this as Canada deciding someone needs to be an adult and start putting forth policies to embrace the future.’’

 

Mr. Carney agreed last month to open a crack in Canada’s exclusion of Chinese made electric vehicles through a 100 percent tariff that was introduced to match a similar U.S. measure. Canada will allow a small number of Chinese E.V.’s into the Canadian market at a low tariff rate.

 

The announcement of the Chinese deal was followed by an agreement between Canada and South Korea that may lead to Korean automakers building Canadian factories for vehicles and batteries. Expanding the presence of Asian companies in Canada could ultimately hurt U.S. companies at a time when they are already losing ground in other parts of the world.

 

Mr. Carney said Canada would still push for a return to free trade in auto and auto parts during this year’s review of the agreement between the United States, Canada and Mexico, but acknowledged that Mr. Trump does not share that objective.

 

He said that the measures he announced Thursday would “make our industry world leading regardless of the outcome” of those trade talks.

 

“This is what a confident country does,” Mr. Carney said.

 

Last month in a widely lauded speech at the World Economic Forum in Davos, Switzerland, Mr. Carney, while not naming Mr. Trump, made clear that the American president had caused an irreparable “rupture” to the world political and economic order and called on other middle powers to form a protective alliance.

 

He underscored that theme on Thursday, repeatedly emphasizing that Canada was in “active discussions with a range of new investors,” outside the United States.

 

The auto assembly and parts manufacturing business is almost entirely based in Ontario, Canada’s most populous province, While it was historically dominated by the Detroit-based vehicle companies, all of which have been in Canada for over a century, Toyota and Honda now account for about three quarters of Canadian production.

 

Since his return to office last year, Mr. Trump’s economic policies have led to the loss of thousands of Canadian auto jobs. Stellantis abandoned a plan that had been partly subsidized by the Canadian government to build a Jeep model at a factory in Brampton, Ontario, and moved production to Illinois. General Motors last week laid off about 700 workers at its pickup truck plant in Oshawa, Ontario, and closed a plant that made electric delivery vans in southwestern Ontario.

 

The leaders of Detroit automakers have also soured public opinion in Canada by appearing to appease Mr. Trump. Last month, Bill Ford, the executive chairman of the car company that bears his family name, took Mr. Trump on a tour of its assembly plant in Dearborn, Mich. During the visit, Mr. Trump said that the United States no longer needs the trade deal with Canada and Mexico.

 

“The problem is we don’t need their product,” Mr. Trump said.

 

Mr. Carney on Thursday officially eliminated a mandate to move to zero emission vehicles by 2035, which had been opposed by automakers. Instead, he introduced tougher emissions standards on all vehicle manufacturers, which the government estimated would lead to electric vehicles making up 90 percent of sales by 2040.

 

The government is also restoring consumer rebates for electric vehicle purchases, a program that expired last year that will start at 5,000 Canadian dollars or $3,600. Mr. Carney said that those rebates will not apply to Chinese-made E.V.s.

 

Mr. Carney said that the government would give credits to automakers who build cars in Canada that they can sell to other companies to allow them to import foreign-made vehicles duty free into the country. It will also offer 3 billion Canadian dollars, or $2.2 billion, for plant investments, cut corporate tax rates for zero emission vehicle makers and allow accelerated tax deductions for investments in E.V. plants and equipment.

 

The trade groups that represent Detroit automakers and Toyota and Honda have both said they welcome the Canadian plan, specifically the incentives for electric vehicles. U.S. carmakers said they also supported the elimination of the zero-emission mandate and incentives for electric vehicles.

 

“We respect the government’s efforts to both sustain and encourage automotive investment in Canada,” the Global Automakers of Canada, the trade group that includes the two Japanese companies, said.

 

Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at austen@nytimes.com.

 

Jack Ewing covers the auto industry for The Times, with an emphasis on electric vehicles.