Thank you.
Madam Chair and committee members, thank you for the invitation to be here today as part of your study of the CUSMA review.
The Canadian Vehicle Manufacturers’ Association, CVMA, is the association that represents Canada’s leading manufacturers of light and heavy-duty motor vehicles. Our membership includes Ford, General Motors and Stellantis.
CVMA members have been operating in Canada for over 100 years. In fact, we just celebrated our 100-year anniversary in 2026. They are responsible for most of the auto production in this country, having built over 100 million vehicles since 1945. Today, they are the largest employers, investors and innovators in the auto manufacturing sector.
With over 90% of Canadian production destined for the U.S., U.S. market access and North American integration are the foundation of the auto industry. Diversification is not an option for automotive, as markets in Europe and Asia are better served by assembly plants in those regions. Canada’s market alone is too small to justify large-scale manufacturing.
Simply put, there is no Canadian auto industry without the U.S. The future of the industry, and the hundreds of thousands of jobs that it supports, requires securing our trade relationship.
U.S. section 232 tariffs on the automotive industry and Canada’s retaliatory measures are doing enormous damage to the integrated North American auto supply chain. The total tariff bill is projected to reach $188 billion U.S. on auto manufacturers by the end of next year. As it stands today, it is more cost-effective to build a vehicle in Japan or Germany and export it to the U.S. than it is to build a vehicle in North America for the U.S. market.
Given our integration with the United States, the situation facing Canada is particularly acute. Tariffs levied on Canadian vehicles reached $5 billion in 2025. This is eroding the competitiveness of our domestic production and making it an increasingly difficult environment for investment.
As we prepare for the CUSMA review, we're recommending the following actions, which we think will position Canada for success.
Number one is to eliminate the Canada-China strategic partnership. This agreement negotiated with China allows 49,000 EVs into Canada. That's 30% of the number of EVs sold last year. That is not an insignificant amount. That undermines our sector right now. It puts the North American auto supply chain at risk. China does not adhere to the rules-based trade and investment principles that have been really fundamental to the success of the auto industry and the Canadian economy more broadly.
Importantly, there are no guardrails in this agreement to ensure a level playing field for manufacturers that have invested in Canada or to protect Canadians from cyber risks. In addition to having a surtax on Chinese EVs, we've been urging the federal government to proceed with the proposed ban on certain Chinese-connected vehicle software that's aligned to the U.S. This will protect Canadian drivers from foreign actors manipulating these technologies to access sensitive or personal information. It will also position us for success in our discussions with the Americans.
Number two is to reduce regulatory complexity. In the face of trade disruptions and U.S. tariffs, we have to do everything possible right now to strengthen the conditions for automotive investment by focusing on what we can control. This means getting rid of, reducing, the regulatory burden facing companies by lowering the cost of investing in plants, machinery, and R and D here in Canada.
I have a couple of examples for you.
The federal EV sales mandate does remain in place to this day, four months after it was announced that it would be repealed. We've been recommending that it be repealed immediately, because it puts costs on manufacturers.
While urgency is required in removing the EV mandate, the opposite holds true for developing Canada’s sovereign GHG regulations—also known as tailpipe regulations. The federal government is currently rushing forward with the development of Canada-unique regulations. We are totally integrated with the U.S. Taking a Canada-unique approach here can be extremely risky for our automotive industry. We're asking the government to take the time and do this properly.
I will close on a note of optimism. I believe there is a deal to be had. We have to get to the table. The Americans are focused on deficits. If that is the lens that they're using, Canada's the only country in the world that is well positioned in that discussion. The Americans have run an average $2.7 billion U.S. auto trade surplus with Canada since the USMCA was put into force. We're the only country in the world the Americans run a surplus with.
There is a deal to be had here. We are not part of the problem. In fact, we are part of the solution for the Americans. We have to get to the table. We can get a deal done, but this has to happen immediately.
Thank you.
