Canada Home to Major Automotive Projects as Trump Tariffs Hang Overhead

Industrial Info is tracking several US$1 billion-plus automotive projects underway in Ontario, Canada, although U.S. President Donald Trump’s potential tariffs pose a threat to the country’s automotive industry.

Trump has threatened to place a 25% tariff on all goods coming in from Canada, as well as Mexico. Trump told reporters on January 23 in the Oval Office he plans to impose the tariffs on February 1, as previously mentioned.

In an interview with Agence Frence-Presse (AFP) (Paris, France), former member of President Ronald Reagan’s administration and informal Trump economic advisor Arthur Laffer said the threat was a negotiation tactic: "He's using trade as a tool to exact other policies. It's his leverage.”

For more information on Trump’s potential tariffs, see Industrial Info’s January 22, 2025, article - Canada Spared from Trump's Tariffs, for Now.

Divisions within the Canadian government emerged regarding Canada’s response to the tariff threat. Deputy Prime Minister Chrystia Freeland resigned in December and Prime Minister Justin Trudeau later said he plans to resign once a new party leader is named. For more information, see January 17, 2025, article - Alberta Refuses to Endorse Canadian Trade Response.

Ontario is the main hub for Canada’s automotive industry. As a province, it is the third-largest trading partner with the U.S.--including the top foreign partner with 17 states--Ontario Premier Doug Ford said in an interview with CNBC. In addition, Ontario is the country’s most populous province.

Ford said raw materials and parts often move across the border multiple times before being used in the final assembly of a vehicle and the tariffs would increase prices, which could then slow production and eliminate jobs.

Ford, who has a majority government, told reporters on January 24 that he would call an early election because he needs a mandate to combat Trump’s tariffs. Ontarians would be headed to the polls on February 27, more than a year before the current election date set for June 2026.

Canadian exports of auto parts came in at US$23.5 billion in 2023, while exports of light vehicles totaled US$53.5 billion, according to Canada-based DesRosiers Automotive Consultants. Imports totaled US$47.5 billion and US$70.4 billion, respectively. Of those, the U.S. accounts for 95.3% of Canada’s total auto exports and 57.7% of its overall auto imports.

Industrial Info is tracking US$12 billion worth of automotive projects under construction in Canada--buoyed by several investments in Ontario worth more than US$1 billion.

The highest-valued project is Volkswagen AG’s (Wolfsburg, Germany) US$5 billion electric vehicle (EV) battery cell-manufacturing plant in Saint Thomas, Ontario, which would be operated by Volkswagen’s battery company PowerCo SE. The 3 million-square-foot plant is designed to feature six production blocks with an annual production capacity of up to 90 gigawatt-hours (Gwh), enough to produce over 1 million EVs.

“The ramp-up of gigafactory St. Thomas is fully on track. Site preparation has already been completed,” PowerCo said in an August statement. “We aim to produce the first cells in 2027, followed by demand-based ramp-up of mass production.”

Subscribers to Industrial Info’s Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here to read more information on the project.

Meanwhile, high-dollar projects involving Stellantis (NYSE:STLA) (Amsterdam, Netherlands) are wrapping up.

A joint venture (NextStar Energy) between Stellantis and LG Energy Solution Limited (LGES) (Seoul, South Korea) is building a US$3.6 billion EV battery-manufacturing plant in Windsor, Ontario, which sits across the border from Detroit, Michigan. The plant is expected to supply 45 GWh per year of batteries for Stellantis' plants.

Production of battery modules, which are grouped together to form battery packs, is underway, while battery-cell manufacturing is expected to begin later this year when construction is complete. Click here to read the project report.

A standalone Stellantis project is designed to support production of both internal combustion engine vehicles and EVs: a US$1.1 billion retool at its assembly plant in Brampton, Ontario will be performed in multiple phases, and production is expected to resume later this year. Work at the 2.95 million-square-foot plant will allow the automaker to build its next-generation, all-electric Jeep Compass, among other models. Subscribers can click here to read a detailed project report.

Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a list of related plant profiles.

Click here for a full list of automotive projects under construction in Canada.