By Paul Vieira
OTTAWA--Canada is allowing a car maker to import more U.S.-assembled vehicles to enter the country exempt from tariffs, citing greater-than-expected domestic auto production from the company.
The cabinet order detailing the change doesn't identify the motor-vehicle manufacturer, citing a need to protect confidential business information. The quantity of duty-free imports permitted is also being withheld, according to the cabinet order.
A spokesman for Canada's Department of Finance declined to elaborate on the cabinet order, noting the change has been relayed to automakers.
The order is dated Feb. 26 but was published online in recent days. Canada has imposed a 25% tariff on U.S.-made cars, in response to the Trump administration's 25% levy on imported foreign-made cars. There's a waiver system in place that allows automakers that make cars in Canada to import a certain number of vehicles from their U.S. plants without facing Canada's retaliatory duty. The tariff-free allowance can be adjusted based on the level of production in Canada.
According to the cabinet order, Canada said one motor-vehicle manufacturer produced automobiles here at a rate higher than forecast and maintains a significant presence in the country. That company's tariff-free allowance will be increased, the order said, contingent on the company maintaining certain production levels for the 12-month period ending April 8.
"Amending remission quota volumes in response to increased Canadian demand will help address concerns with respect to vehicle availability and affordability. It also demonstrates Canada's support of companies that continue to uphold their commitments to Canada," the order said.
Auto-industry officials indicate Stellantis might be the company that received a higher Canadian tariff-free quota, citing increased production of minivans after the company added a third shift last month at its factory in Windsor, Ontario. A spokeswoman for Stellantis didn't immediately respond to a request for comment.
Representatives for GM, Ford, Honda and Toyota didn't immediately respond to requests for comment. Auto-industry officials note Stellantis has recently increased production in Canada, through the addition of a third shift last month at its assembly plant in Windsor, Ontario. A Stellantis spokeswoman declined comment.
Data from the Trillium Network for Advanced Manufacturing, a nonprofit think tank in London, Ontario, indicates that the share of auto production in Canada from Stellantis, GM and Ford sits at 23%, from roughly 56% a decade ago, while Honda and Toyota now account for 77% of auto production.
Canada recently released a revised auto strategy, aimed at avoiding further job losses in the motor-vehicle sector. One of the aims, officials argue, is to reward companies that maintain and expand vehicle production in Canada. One of the ways Canada intends to accomplish this is through tradable credits, issued to manufacturers based on the level of production and investment in the country. Companies with a surplus could sell them to other car makers seeking to import U.S.-made vehicles into Canada, while manufacturers without a sufficient number of import credits would have to pay Canada's 25% tariff on U.S.-made vehicles, according to a finance ministry's consultation paper.
Canada's lead minister in charge of U.S.-Canada trade, Dominic LeBlanc, is in Washington for a series of meetings--among them with U.S. Trade Representative Jamieson Greer--to advance talks on an agreement ahead of the U.S.-led review later this year of the U.S.-Mexico-Canada trade pact. This marks the first face-to-face meeting among senior U.S. and Canadian officials on trade since last fall, when talks aimed at easing tariffs on Canadian-made goods like motor vehicles, steel and aluminum fell apart due to President Trump's displeasure over anti-tariff advertising from the province of Ontario.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
03-06-26 1451ET
