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National Observer
2 hours ago
- National Observer
Ottawa warned early in new year of wheels wobbling on $100 billion EV strategy
The federal government was warned early in 2025 that its $100 billion electric vehicle strategy was in danger of being run off the road by slowing North American EV sales and the economic mayhem sown by US President Donald Trump's tariffs on Canada, a newly released document reveals. François-Philippe Champagne, then federal minister of Innovation, Science and Economic Development Canada, was sent a briefing note on Jan. 10 by his deputy minister, Philip Jennings, that flagged 'a decline in expectations' among EV makers that imperiled the plan's progress. 'The slowdown in growth has contributed to delays, modifications, or scaling back of planned investments' in the auto sector despite tens of billions of dollars in investments having already been announced, Jennings said in the document obtained by Canada's National Observer through an access to information and privacy request. The briefing note was delivered to Champagne only weeks after he told CNO that critics of the government's embattled EV strategy lacked 'vision and ambition.' Champagne was named Minister of National Revenue in a cabinet shuffle after the Liberals won the April federal election that also saw Mélanie Joly take over the Industry, Science and Economic Development portfolio. Developing an EV industrial ecosystem from mining critical minerals used in vehicle batteries to new assembly lines for electric vehicles would give Canada a competitive advantage in a global industry 'for decades to come — but not overnight,' Champagne said in December. Joly's office told Canada's National Observer that it 'recognizes the sector's concerns and is continuing to engage meaningfully with industry stakeholders to address and alleviate challenges' linked to US tariffs, though no specific action plan was outlined in its response. 'Despite short-term policy fluctuations, the long-term trajectory for EV adoption remains strong,' says Dunsky Energy analyst Lindsay Wiginton 'Our government is working to ensure EVs are made in Canada, so Canadian workers benefit from the growth and jobs in this industry," said a spokesperson. Canada's EV plans going flat? A total of $46.1 billion in investments across the Canadian EV supply chain was announced by automakers including Honda, Volkswagen, GM and Ford from October 2021 to April last year. Federal and provincial governments pledged $52.5 billion in incentives, tax breaks and other support, according to Canada's Parliamentary Budget Officer, which provides economic analysis to the government. But dark skies have threatened the EV strategy and long-term future of auto manufacturing in Ontario as the Canada-US trade war drags on. In April, GM shuttered its CAMI assembly plant in Ingersoll, Ont., where it builds an electric delivery van. GM expected to reopen the plant at 'half capacity' in the fall. Ford and Stellantis, which cited tariffs as a major factor in a $3.7 billion loss in the first half of 2025, have also suspended or delayed EV production in Canada. Some 40,000 EVs have been produced to-date in Canada, which in 2024 imposed a 100 per cent tariff on imports of Chinese EVs to protect the domestic industry. China made 12.4 million electric cars last year, accounting for 70 per cent of global EV output, according to the International Energy Agency. Battery makers have hit speed bumps too. A planned $7 billion EV manufacturing plant in Saint-Basile-le-Grand and McMasterville, Que, collapsed after Swedish battery maker Northvolt declared bankruptcy in March. The Quebec government lost a $270 million investment in the project. More recently, trouble emerged at the $5 billion NextStar EV battery factory being built by Stellantis and South Korea's LG Energy in Windsor, Ont. Several Canadian contractors have filed lawsuits alleging millions of dollars in unpaid work at the plant, which has received $15 billion in federal and provincial incentives, according to media reports. Jennings said in his briefing note that slowing EV purchases had 'created doubt in the trajectory of [future] sales'. Trump's executive orders soon after taking office to scrap Biden-era EV targets and tax credits, along with the end of federal EV incentives in Canada, have 'added uncertainty' in the market, the note said. 'In the long-term these impacts on their own are unlikely to jeopardize the prosperity of the automotive sector in Canada, but they depend on the electrification plans of the manufacturer and the health of the sector overall, including the impact of potential U.S. policies and tariffs,' Jennings said. EV transition 'unstoppable' The federal government should stick to its long-term plan for an EV supply chain in Canada because the global shift to EVs is 'unstoppable,' said Matthew Fortier, CEO of Accelerate, a Toronto-based zero-emissions vehicle industrial alliance. There are signs of 'underlying momentum' for Canada's EV industry, said Lindsay Wiginton, managing consultant at research house Dunsky Energy. She noted many analysts have a positive global EV outlook, including projections that a quarter of all cars sold in 2025 will be electric. That growth is 'driven in large part by the continued decline in lithium-ion battery costs that is helping to bring more affordable EV models' to market, she said. 'Despite short-term policy fluctuations, the long-term trajectory for EV adoption remains strong,' she added. Some auto makers are less optimistic. They want the federal government to drop a mandate for EVs to make up 20 per cent of cars sold in Canada by 2026 and 100 per cent by 2035 – arguing that slowing EV sales and US tariffs have delayed efforts to build an electric vehicle supply chain. Ontario Premier Doug Ford, speaking at a joint press conference on Tuesday with Alberta's Danielle Smith and Saskatchewan's Scott Moe, said: 'We have to get rid of these mandates. The companies won't be able to meet these targets. But let's not stop spending. I am confident that the EV sector will grow eventually.' Environment Minister Julie Dabrusin has been unswayed by their arguments so far, according to media reports. Canada's 'competitive advantages' Fortier said Canada's automotive sector cannot hope to be 'globally relevant in 10-15 years' unless Ottawa focuses on 'competitive advantages that our neighbours don't have' in areas including critical minerals, advanced industrial materials, and EV battery technology. 'If we do that now, Canada can become a necessary part of the continental supply chain, and we can have leverage in the auto sector when EVs are the dominant mode of vehicle production in North America,' Fortier said. The US is by far the biggest market for Canadian-made cars and trucks, with 93 per cent of the $51 billion in vehicles exported in 2023 shipped south of the border, according to the Canadian Vehicle Manufacturers' Association, an industry trade body. The US imposed a 25 per cent tariff on Canadian auto makers and parts manufacturers in April, forcing hundreds of job losses in Ontario, the industry's historic heartland. Trump has threatened to raise the tariffs to 35 per cent on Aug 1. A high-profile US-Japan trade deal announced today (Wednesday) will see the US tariff on Japan's auto sector lowered to 15 per cent from 35 per cent. That deal might point to a possible reduction in US tariffs on Canadian car makers, but it is not a long-term solution, Fortier said. 'Any standing tariff on Canadian-made cars is a reminder that we urgently need to develop more negotiating leverage. The way to do this is to build upstream and midstream capacity for the batteries that will power the future of this sector,' he said.
CBC
9 hours ago
- CBC
Canada-U.S. trade deal hopes appear to fade after latest talks
Although U.S. President Donald Trump's Aug. 1 deadline is fast approaching, there is no sign of a breakthrough yet on a new Canada-U.S. trade deal after a week of talks in Washington, D.C. Ottawa continues to say it won't sign anything that isn't in Canada's best interest.
Global News
12 hours ago
- Global News
LeBlanc ‘encouraged' after latest U.S. talks as Trump tariff deadline looms
Canada-U.S. Trade Minister Dominic LeBlanc said Thursday he's feeling 'encouraged' after meeting with U.S. Commerce Secretary Howard Lutnick and American lawmakers in Washington ahead of next week's tariff deadline. But LeBlanc also suggested that a new economic and security arrangement with the United States may not materialize in time for U.S. President Donald Trump's latest deadline of Aug. 1. 'Canadians expect us to take the time necessary to get the best deal we can in the interest of Canadian workers,' LeBlanc said outside the Dirksen Senate Office Building in Washington. 'So we are only going to be in a position to accept a deal when the prime minister decides that it is the best deal we can get in the interest of Canadian workers and the Canadian economy.' Trump has sent letters to multiple nations, including Canada, saying that if no deal is made by Aug. 1, he will impose high tariffs on imports to the United States. Story continues below advertisement While Trump's letter to Prime Minister Mark Carney threatened Canada with 35 per cent tariffs, the White House has said the levies will not be applied to imports that comply with the Canada-U.S-Mexico Agreement on trade. Canada is also being hit with Trump's tariffs on steel, aluminum and automobiles, and will be affected by copper duties that are also expected to kick in on Aug. 1. 5:23 WA state senator says Trump doesn't understand effects of trade war The Trump administration has announced only a handful of trade deal frameworks with other nations since the president first threatened his so-called 'Liberation Day' tariffs in April. Trump this week said his administration made deals with Japan and the Philippines, adding to previous agreements with Indonesia, Vietnam and the United Kingdom. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy While many details of the frameworks remain vague, all of them include some level of tariff – and it's not clear whether they would shield countries from Trump's plan to impose further sectoral duties on things like semiconductors and lumber. Story continues below advertisement LeBlanc said 'complex negotiations' are continuing between Canada and the United States and he will be returning to Washington next week. He described his meeting with Lutnick as productive and cordial. LeBlanc, who was joined in the meetings by Canadian Ambassador to the U.S. Kirsten Hillman, also had face time with Republican senators Kevin Cramer, Roger Marshall, Shelley Moore Capito, Todd Young and Tim Scott. LeBlanc said they discussed border security and defence issues and the American lawmakers shared a 'desire to see more stability and predictability in the relationship with the United States.' 'My conversations have focused on how we share so many priorities of President Trump's administration that we should be able to figure out together a deal that's in the best interest of Canadian workers, and obviously they are going to do their side of the table in terms of the American economy and American workers,' he said. 1:55 'Only the best deal for Canada': Carney on negotiating tariffs, trade with Trump Federal officials have remained tight-lipped about what Trump's team has said it wants from Canada. Story continues below advertisement After this week's trade deal frameworks were announced, Trump boasted on social media that he would only consider lowering tariff rates if countries open their markets to the United States. The president also said Japan would invest $550 billion in the U.S. at his 'direction.' Trump said Thursday that Japan 'bought it down basically,' referring to the lower tariff rate. 'I would let other countries buy it down,' he said. 2:05 'Largest trade deal in history': Trump finalizes US trade pact with Japan, cuts tariffs to 15% When Trump first threatened Canada with tariffs, he claimed it was due to the cross-border flow of deadly fentanyl. Ottawa responded with a boosted border plan and named a 'fentanyl czar.' Ottawa walked back its digital services tax last month after Trump threatened to halt all trade talks. Carney last week announced measures to stop China from dumping steel in Canada. Story continues below advertisement Hillman said those efforts help Canada in its ongoing negotiations. 'In our discussion with the American senators this week, the American administration, the measures that Canada has taken on steel in particular… are some of the strongest in the world,' she said. 'And that has been recognized and very much appreciated. So we are making some positive progress.' Alaska Sen. Lisa Murkowski joined a bipartisan group of American lawmakers in Ottawa last week. The Republican said Thursday that 'we would all like to get to a better place with our trade relationship with Canada' but suggested it's not likely to happen before Aug. 1. Canada cannot be treated 'as yet one more country that we need to reconcile tariffs on' because of shared economic and national security issues, she said. 'I wish that I could say, 'It feels good,' that this is all going to be taken care of before the first of August, but I'm not sensing that,' she said.
