Donald Trump is an existential threat to Canada’s auto sector. As he bluntly stated during a meeting with the prime minister in May, “we don’t want cars from Canada.” Tariffs are intended to make it so that it no longer makes “economic sense” to continue manufacturing in the country.
In the months since, Canadian-assembled vehicles have been slapped with a 25 per cent levy which could be reduced depending on the amount of U.S. content.
Companies have already laid off thousands of workers directly and indirectly employed in the automotive sector as tariffs disrupt closely intertwined supply chains—and American manufacturers, like General Motors, lay off workers and abandon EV manufacturing plans in Canada.
Regions particularly reliant on manufacturing have also been negatively impacted. Ontario cities like Brampton, Ingersoll, and Oakville, have faced significant layoffs and plant closures, with some questioning the long-term viability of production as the trade war drags on.
By the numbers, exports of motor vehicles and parts were down by 4.2 per cent in June 2025. The decline has been sharpest in the export of passenger cars and light trucks, which fell by 8.9 per cent, marking the third consecutive month of decline.
While officials had hoped for a trade deal by now, the prospect of an agreement is currently in limbo, according to Canadian negotiators and American officials.
Even if, by some chance, a deal is reached, it likely won’t come without some tariffs—something deemed unsustainable by Canadian manufacturers and the union representing autoworkers.
For decades, integration with the U.S. and a dependence on foreign automakers has been the cornerstone of Canada’s industrial strategy. As Unifor, the union which represents most Canadian auto workers, noted during the Biden Administration, this need not be the case. Canada has the potential to be an automotive superpower if governments are able and willing to coordinate and implement a sector policy that isn’t just tax cuts or subsidies.
With the auto sector now firmly in Donald Trump’s sights, the federal government should act on this vision and take it one step further. Canada already has the skilled workforce, industrial capacity, and natural resources, it only makes sense that it have its own publicly owned automaker as well.
A national auto brand?
The closest to a national Canadian automaker is “Project Arrow”, spearheaded by the Auto Manufacturers and Parts Association (AMPA). As a privately backed initiative, its goal is to foster an “all Canadian effort” to create zero emissions light vehicles.
The AMPA unveiled its first test model in 2023. The project is only in its second stage of development as it seeks additional suppliers and strategic partners.
Despite the media attention the project has received, there are two glaring issues. The first is that there is no timeline as to when the Arrow will be commercially available. As it stands, the goal is to manufacture only two vehicles a year for the next three years in a bid to attract investors.
Secondly, there is no mention of how much an Arrow will cost when, if it is ever, released. Electric vehicles tend to be expensive at the point of sale, a reality that is further complicated by the expiry of federal tax credits. Canadians need something that is attractive to consumers but also affordable, unlike many of the luxury vehicles and electric SUVs out there.
Adding these two together, and Project Arrow is more of an advertising pitch for the auto parts sector rather than a serious effort to establish a Canadian automaker, which should cast further doubt on leaving such an endeavor wholly in private hands.
That said, with a changing global market in mind, countries have been more willing to get involved in the planning and development of national automotive companies. Mexico’s “Olinia”, for instance, is a planned EV line set to be led by a new federal ministry, with a focus on affordability. As noted in its initial press release, the target demographic is families and young people, with three models expected to cost between US $4,400 to US $7,400—significantly lower than other EVs sold in the country.
The idea is that a nationally led framework will aid in the project’s coordination, with production intended to take place across several regions to keep costs down. Government ownership will also ensure a reliable stream of investment and that the end product is something attainable by the average Mexican family.
Turkey is pursuing a similar project through its Automobile Joint Venture Group (TOGG), a consortium of companies with the support and financial backing of the government. The goal is to create a national brand of EVs, with some models already being available for purchase.
With Mexico and Turkey offering prospective templates, Canada need not reinvent the wheel in pursuing its own, publicly owned automaker. Only the federal government has the ability to operate a program of this magnitude by bringing together our natural resources, skilled workforce, and industrial capacity to create a sustainable and affordable Canadian brand.
Increasing public direction of the auto market
Projects like Arrow are interesting concepts—and, if brought under public ownership, could point towards a Canadian version of Olinia or Togg. But when it comes to consumer-facing vehicles, the federal government could also simply purchase significant shares in an existing automaker and gain significant board representation, similar to the ways that the government of the German state of Lower Saxony has permanent representation on the Volkswagen board. The federal government could make an offer to a company in financial trouble, like Nissan, in exchange for the company guaranteeing (or setting up, in the case of Nissan) long-term production infrastructure in Canada.
In fact, following the 2008 financial crisis and associated auto sector bailouts, the governments of Canada and the U.S. both held significant ownership shares of the “Big Three” North American automakers. They sold those shares shortly afterwards, despite workers at the companies advocating for continued government ownership and board representation, which could have led to something similar to the Volkswagen model.
Such a model—of partial state ownership and direction of an existing company—would probably be most appropriate for a consumer-facing vehicle, rather than attempting to create a new product from scratch. In addition to allowing for the preservation of jobs, it would also allow policy-makers to more directly control things like vehicle size and headlight brightness—as increasingly large vehicles and overly bright headlights have become a growing safety hazard for other road users.
Private automakers that operate in Canada are increasingly voicing discontent with Canada’s Electric Vehicle mandate, which plans on growing the percentage of vehicle production, beginning with 20 per cent in 2026 and growing to 100 per cent in 2035. Those manufacturers are pressuring the government to scrap the policy entirely, and using trade uncertainty as a push to do so. Such a move would be a massive step backwards for transport electrification in Canada. Board representation by the federal government could help ensure that companies are keeping up with their targets.
A crown corporation for institutional fleets
The personal vehicle market, however, is fairly saturated. The most popular models of vehicles sell in the tens of thousands of models per year in Canada, but a break-even point for the industry would likely require hundreds of thousands of annual sales to operate a major plant at the scale of the current auto-manufacturing market.
With this in mind, the more interesting options are actually outside of the consumer market—and into things like replacing institutional vehicle fleets like school buses, trucks, and Canada Post vehicles. In this case, the federal government could consider setting up a crown corporation or ministry to direct the production of new fleets.
Such a project could be mandated to rehire workers who have been laid off by private auto companies due to the U.S. trade war. It could also appropriate any factories that automakers shutter to keep them running.The crown corporation could be given a mandate to source parts and materials from Canadian sources as much as possible, and to green its supply chain.
There’s even a starting point—Lion Electric. That Quebec-based company has been producing electric buses since 2017, as well as electric trucks, and logistics equipment. The company employs around 1,000 people at its St-Jerome factory. In December 2024, Lion applied for bankruptcy.
A federally funded crown corporation with a mandate for vehicle production could purchase Lion and keep the factory running. The infrastructure is already in place, and the workers at the plant have the expertise to continue building and expanding the operation.
There are up to 50,000 school buses in operation in Canada, and only around 300 of them are electric, according to the Canadian Electric School Bus Alliance. A federal crown corporation, beginning with Lion, could manufacture the vehicles needed for that transition. Doing so, even while progressively ramping up capacity, will take years—meaning that this transition alone would generate long-term well-paid jobs, while also ensuring that federal electrification plans keep money within Canada.
In the longer term, such a project, owned by the public, could be used to advance a number of other social and infrastructural goals as well—acting as an innovator and driver of transportation electrification in Canada. Having a public vehicle manufacturer would mean developing in-house expertise in manufacturing—expertise that could then be applied to a wide range of other projects.
The crown corporation could produce and install a network of electric vehicle charging stations across Canada, possibly using the existing vast network of post office parking lots. In addition to school buses, it could also help design and manufacture equipment for public transit agencies across the country, as well as electrify Canada Post’s massive fleet of vehicles. It could be given a mandate to develop electric trucks for medium- and long-haul trucking, or cargo-bicycle trailers for last-mile logistics in urban environments (such as the ones already being used by some companies like FedEx and Purolator).
Some of these products are already designed and ready at the now-defunct Lion electric. Others exist elsewhere in stalled form—such as the all-electric Brightdrop vans which GM was manufacturing in Ingersoll, Ontario, before idling the plant in April 2025. A crown corporation, working in collaboration with a ministry or otherwise, could keep that production line alive, and use the vans to replace the fleet at Canada Post.
The possibilities are as wide as the need for transportation electrification in Canada—which is to say, extremely wide.
Workers thought of it first
Such a project would fit squarely within the demands that workers in these sectors have already been making for some years now.
Unifor has an ambitious and detailed plan for a publicly-led and worker-centric industrial strategy in the Canadian auto industry—including establishing a ministry to lead its development. It has demanded increasing government representation on automaker boards and public direction of the industry.
Elsewhere, when GM shut down its massive Oshawa plant in 2019, leaving 5,000 workers unemployed, some workers demanded that the government expropriate the shuttered factory and use it to build a fleet of electric vehicles for Canada Post. GM reopened that plant in late 2021 as a “pop-up plant” to build Chevrolet Silverados. The company announced that it is laying off 750 workers due to trade uncertainty.
Today, at the Ingersoll GM plant (which produces electric vans and is currently idle), the government wouldn’t even need to re-tool the factory to make vehicles for Canada Post—just keep it running.
Workers at the post office, for their part, have a well-developed plan to use Canada Post’s significant logistics network as a way to drive decarbonization in Canada, partially through electrifying their fleet and building charging stations at post offices.
Increased public ownership—both in the private market and via a crown corporation—could act as an example for a particularly carbon-intensive manufacturing sector’s transition, and provide a model for other industries. Such a plan could act as an engine for a just transition in Canada—a transition away from both dependence on the U.S. economy and fossil fuels.
