Industry and Technology Committee on Oct. 27th, 2025

[Dominique O'Rourke, Liberal, Guelph, ON]

That's terrific. Thank you.

I want to clarify, as well, regarding Ms. Borrelli's point, that the only broken promise here was on the part of Stellantis, not on the part of the Government of Canada.

I'd like to move on.

We know there are a number of government supports in place for workers in the sector. Those include trades training; the regional tariff response initiative, which is $6.5 billion in new measures to protect Canadian businesses and workers; those ongoing negotiations for sectoral deals, of course; and CUSMA.

How important are these measures, and what other actions, if any, can the Canadian government take to stabilize the investment environment in the Canadian auto sector?

[David Adams]

All of those actions are very important. The reality is that we are in a very difficult situation. We're playing poker with what are maybe not the best cards, but I think the reality is that we do have cards to play.

Mr. Kingston or Mr. Williams pointed out that 40% of our sales in the Canadian market are American-built vehicles. That, presumably, should come into part of the dialogue when we're talking with the U.S. administration about how we're going to structure a trade deal, if there's one to be had between the two nations.

I would go back to the other effort that needs to be made, which is that it's clear the United States does not care very much about Canada or Canada's automotive industry, but what we need to underscore for the U.S. is that the competitiveness of their own industry is dependent on having that integrated North American market with Canada and the U.S. as vital partners in that arrangement.

[The Chair, Liberal, Ben Carr]

Thank you very much, Ms. O'Rourke.

Mr. Ste‑Marie, you have the floor for two and a half minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you, Mr. Chair.

If I understand correctly, witnesses, you agree that you don't expect the current tariff situation to remain for the long term. I think we all agree that we are doing everything we need to do, everything we can and everything we do not give up, to have true free trade with the United States, particularly in the automotive manufacturing sector.

However, I have a question for you, and I might ask Mr. Kingston to answer it first.

If the current tariffs were in place for the long term, would we be in the same situation as we were before 1965? The same vehicle models would be assembled north and south of the border for the respective markets, with higher costs and less choice for those markets.

[Brian Kingston]

It's an excellent question, and it really gets to the heart of why we have the CUSMA and, prior to that, NAFTA, and before that, the Canada-U.S. FTA. There was a recognition that protectionism is actually bad for consumers. When you divvy up markets and you make production hyperlocally focused, it means that the consumer has less choice and less access to new technology and ultimately faces higher prices.

If you play this out, and let's presume we are going to a permanently more protectionist world, that is what could result. You'd have economies closed off from each other and you would build in market to service the market.

I ultimately don't think that's where we're going, because I just know that a $188-billion tariff cost is going to hurt the American consumer. You're going to see vehicle prices go up $4,000, $12,000 or $15,000 U.S. I don't think people signed up for that. It takes time, though, for that to work through the system. That is a potential outcome, but I ultimately think we will find a landing zone.

The key for Canada is to always be relatively better positioned than any other country in the world in terms of our access to the U.S. That's what we need to focus on.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you very much.

I have 30 seconds left. Mr. Williams or Mr. Adams, would you like to add a comment?

[Huw Williams]

Yes, I would like to add something about the United States.

What we've seen in the market with actual car dealerships is that sales have been very positive. People are afraid of the tariffs, so they've been buying forward on the tariffs as opposed to not. It will take some time to work that out.

I'll just say from a political point of view that we've done a lot of work in Washington, as I said before. There's a lack of courage in Congress at the moment on the Republican side to speak out against the administration, but they're aware of the problems on a state-by-state basis.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you.

[The Chair, Liberal, Ben Carr]

Thank you very much.

[David Adams]

Currently, manufacturers are still at full production, but the tariffs continue to bite. They're largely absorbing the tariffs right now, but as more time goes by, that becomes a continually unsustainable proposition.

[The Chair, Liberal, Ben Carr]

Thank you very much.

Mr. Guglielmin, you have five minutes.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, gentlemen, for your testimony today.

A lot of what's been discussed with respect to tariffs and other market conditions is this fact of certainty being required for investment.

Just out of curiosity, Mr. Kingston, from your perspective, does a pause on the EV mandates give enough certainty for the attraction of investment dollars in the sector?

[Brian Kingston]

No. It doesn't. We appreciate that the government recognizes that there is an issue here, but the way the mandate works is that a one-year pause doesn't change the fact that companies have to contract for credits out to 2035. They have to make sure they have the certainty that they can still operate in this market. The pause hasn't provided any additional certainty.

To Mr. Williams' point, what we're hearing from ECCC is concerning at this stage.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

I would imagine that if the government were listening to the industry, they would remove the EV mandates altogether.

[Brian Kingston]

It is a simple action that could be taken immediately and that would provide significant relief now.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you.

Mr. Adams, you've spoken about duplicative regulations. We've heard at this committee from others who have said that there are some 105,000 different regulations on the manufacturing sector. Could you give an example of how this duplication is adding costs or discouraging investment for some of your members?

[David Adams]

It might seem like a trite example, but a lot of regulatory authority has been given to the provinces as well. Some of the western provinces require little mudflaps on the vehicle. You would think that each province would have a standardized mudflap that would be required on vehicles, but they don't. Every manufacturer has to deal with different provincial requirements for mudflaps because of gravel roads and that sort of thing. That's a tiny example.

There's another larger example in terms of stewardship programs for batteries and tires and those sorts of things. We have umpteen different programs, I think 85, that impact the automotive industry. These stewardship programs add costs and duplications. No harmony exists.

The last one, which was already referred to and is relevant to the point that was just made, is that with our EV mandates, we have a federal mandate and we have two provincial mandates in place that are similar and are trying to achieve the same goal but with very different penalty structures and whatnot as well.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Mr. Adams, from a global perspective, again, we're talking a lot about how we need to create the environmental conditions for business investment to be attractive and for it to flourish. I know that Mr. Kingston in his opening remarks was very much talking about the business climate and competitiveness here in Canada.

I'm just wondering how you feel Canada compares with peer jurisdictions when it comes to things like regulations, tax environment and clarity for investment attractiveness.

[David Adams]

I mean, there's always room for improvement, but I think the reality is that if you look back to the comments earlier in the conversation about attracting EV investment, for instance, $24 billion or $25 billion of the $40-odd billion came from my member companies into Canada. Canada, I think, did a reasonably good job at.... Actually, they over-vectored on attracting that investment compared with our percentage of the North American content.

I think we've done a reasonably good job. Could we do better? Well, sure, we could always do better. I think regulatory redundancy, building a competitive tax framework and, as I said in my remarks, having a comprehensive strategy around our industry are very important.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Mr. Kingston, in light of the One Big Beautiful Bill Act and some of the other very aggressive changes the U.S. is making to policy to attract investment, with such things as 100% writeoffs for R and D and other tax incentives, do you think currently our government is doing enough to align with U.S. industrial and trade policies to keep investment here in Canada, especially given the new climate we're in?

[Brian Kingston]

We can and must do more.

If you think back to the first Trump administration and the tax cuts that were brought in by the United States, the government reacted and did the right thing. We had accelerated capital cost allowance and other measures that were put in. Then there was the IRA, and now we have the second Trump administration with the One Big Beautiful Bill Act.

In every instance, Canada is reacting to U.S. policy changes. I'd like to see a world in which Canada has a proactive plan with a simple mission. Let's be the most competitive economy in the world and do whatever it takes to build that out so that, when there are changes in the United States, they don't concern us because we are hyper competitive.

There's a lot we can do, and now is the time. Now we should be having those conversations and making those hard choices to improve the tax system and improve our regulatory environment.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, gentlemen.

[The Chair, Liberal, Ben Carr]

Thank you.

Madam O'Rourke, you have five minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you, Chair.

It's really fascinating, Mr. Adams. I'd be interested in hearing more about the interprovincial trade barriers. The federal government has removed all its federal interprovincial trade barriers, and I think it would be incumbent upon us to urge the provinces to do the same.

For the record, I just want to make it clear that foreign direct investment was a record $85 billion last year. Again, it brings us back to this conclusion that the challenges we're facing in this moment are not of the federal government's doing, but are the imposition of these unjustified tariffs by the Americans.

Mr. Adams, I was really intrigued by your proposal of having a royal commission that could look at other strengths of the sector. I'm wondering if you want to elaborate on that.

[David Adams]

I'll just say that there were problems back in the late 1950s and early 1960s when we weren't able to optimize our automotive industry. We had very high tariff walls coming into Canada, and we had very costly vehicles in Canada as a result. I think that's what led ultimately to the Auto Pact, which resulted in the economies of scale by being able to produce in both countries for either country when producing those vehicles together.

The reality is that, as I mentioned in my remarks, we have a lot of different subsectors to our industry that weren't present back in the 1960s. I think the key is how we look at the industry holistically and figure out how we're going to encompass a critical minerals strategy, connected automated vehicles and cybersecurity, which are all part and parcel of a modern vehicle.

I don't think anybody has really given any holistic thought to that, and Canada has some real strengths in that. If that's going to be part of our automotive industry going forward, then those are areas that we can capitalize on.