Canada to give automakers a break on EV sales target, offers tariff aid

• Reuters

• Published On Sep 6, 2025 at 10:12 AM IST

The order came while hearing a Public Interest Litigation (PIL) filed by Jan Seva Welfare Society.

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Canada on Friday said it was waiving a requirement that 20 per cent of all vehicles sold next year be emissions-free, part of an aid package designed to help companies deal with damage done by US tariffs. The 20 per cent target was mandated by the Liberal government of then-Prime Minister Justin Trudeau in 2023. Trudeau’s successor, Mark Carney, said waiving the rule would help the industry deal with punitive US measures that are also targeting the steel and aluminum sectors.

“This will provide immediate financial relief to automakers at a time of increased pressures on economic competitiveness,” he told a televised press conference.

Ottawa will also launch an immediate 60-day review to reduce costs linked to the EV sales requirement.

The Canadian Vehicle Manufacturers’ Association welcomed the move, saying the push for mandates imposed unsustainable costs on companies and threatened investment. Carney said it was too soon to draw any conclusions about whether Ottawa should lift the 100 per cent tariffs it imposed on Chinese-made electric vehicles last year. China on Friday prolonged a probe into imports of canola from Canada, one of the world’s leading suppliers.

Carney, who won an April election on the need to diversify away from the United States, said Ottawa would set up a new C$5 billion ($3.6 billion) fund with flexible terms to help firms in all sectors affected by tariffs.

The US measures are “causing extreme uncertainty that is holding back massive amounts of investment”, he said.

Ottawa will introduce a new policy to ensure the federal government buys from Canadian suppliers and is also introducing a new biofuel production incentive, with over C$370 million for farmers to address immediate competitiveness challenges.

Carney did not mention specific new aid for the steel and aluminum sectors. When pressed, he said companies could apply for help from existing funds.

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