Canadian Prime Minister Mark Carney announces delay to electric vehicle sales mandate and unveils measures to cushion industry impact amidst trade tensions with the US and China, reflecting a pragmatic response to economic challenges.
Canadian Prime Minister Mark Carney has announced that the country will be delaying the rollout of its electric vehicle (EV) sales mandate, which was originally set to require 20% of passenger vehicle sales to be zero-emission by 2026. This move mostly responds to economic pressure on the automotive sector, largely caused by tariffs imposed by the United States under President Donald Trump. The mandate was first introduced by the previous Prime Minister Justin Trudeau as part of Canada's broader plan to encourage a shift toward cleaner vehicles. Carney admitted that the auto industry is feeling quite strained due to U.S. trade policies, including a hefty 50% tariff on steel and aluminum imports and a 25% tariff on vehicle parts and finished vehicles—despite some protections offered by the USMCA deal.
Business representatives have actually welcomed the delay. Flavio Volpe, who heads the Automotive Parts Manufacturers Association, pointed out that Canada’s auto production is pretty much concentrated for the U.S. market. Recently, the U.S. has scaled back EV incentives and support for its industry, turning attention back to more traditional vehicles like pickups. Volpe mentioned that the delay is a necessary stay of execution given the “massive change in U.S. trade policy,” and the financial difficulties carmakers are already facing. Likewise, the Canadian Vehicle Manufacturers' Association had pushed to scrap the EV sales target altogether, arguing that the sector is struggling with liquidity issues and operational hurdles.
Beyond just postponing the EV mandate, Carney unveiled a wider set of initiatives meant to cushion the blow of U.S. tariffs on Canadian industries. The government plans to launch a C$5 billion fund, called the “strategic response fund,” aimed at giving flexible financial aid to businesses across sectors hit hardest, such as steel, autos, and lumber. This is part of a strategic pivot to lessen Canada's reliance on U.S. markets and encourage more domestic procurement. There’s also an effort, through a “Buy Canada” campaign, to prioritize Canadian-made materials and labor in government projects—to give local industries a boost. Employment insurance policies are also being tweaked to offer more flexibility, and benefits are being extended to workers in industries affected by trade tensions.
In addition to these broad initiatives, the government announced a separate C$370 million in incentives targeted at Canadian canola producers, especially after China placed retaliatory tariffs on the commodity. This move was widely viewed as a response to Canada’s own tariffs on Chinese electric vehicles. It’s part of a bigger challenge, since Canada also faces tariffs on steel and aluminum exports—key inputs for both automotive and manufacturing sectors. Carney noted that in the second quarter of 2025, Canada's economy shrank by 1.6%, and unemployment increased to 7.1%, which underscores the urgent need to counteract tariff impacts through both financial aid and smarter policy steps.
While Canada is still engaging in trade negotiations with the U.S. to seek tariff relief, progress has been cautious. Carney expressed some cautious optimism after a recent phone chat with President Trump but emphasized that any resolution will take time. Meanwhile, Canada continues to maintain a full 100% tariff on Chinese electric vehicles, adding another layer of complexity to its trade relations, especially as China steps up its investigation into Canadian canola imports.
The automotive sector remains a cornerstone of Canada’s economy—employing about 125,000 workers directly and around 500,000 in related fields. The country produces just under two million vehicles annually. The decision to push back the EV sales target, together with the rollout of these relief programs, signals a practical, pragmatic approach by Carney’s government. It’s about protecting the industry through these turbulent trade times, while also re-examining long-term regulatory goals, especially given the shifting geopolitical landscape and economic realities. Honestly, it’s a delicate balancing act, but one necessary for now.
Source: Noah Wire Services
