After providing Stellantis with nearly $105 million to upgrade two Ontario plants, the federal government is currently assessing the agreement to determine if the automaker breached the terms by announcing the relocation of some production to the U.S. Stellantis recently disclosed its intention to shift production of its Jeep Compass from Brampton, Ont., to Illinois. Finance Minister François-Philippe Champagne indicated that the government is prepared to uphold its contractual rights, emphasizing the importance of evaluating the promises made and actions taken by Stellantis.
The move by Stellantis to expand in the U.S. has been perceived as a setback for Canada and was applauded by the White House as a triumph. U.S. President Donald Trump has expressed a desire to lead the auto manufacturing sector and his commerce secretary, Howard Lutnick, expressed interest in redirecting auto assembly operations from Canada. CBC News confirmed that the Canadian government disbursed over $18.6 million to Stellantis in the 2023 fiscal year and an additional $85.9 million in the 2024 fiscal year to upgrade its Windsor and Brampton facilities.
In 2022, Ottawa announced a $529 million investment to assist Stellantis in modernizing the two plants to enhance electric vehicle production in Canada. This funding, sourced from the Strategic Innovation Fund to support employment in Windsor and Brampton, is typically provided in stages based on the company meeting specific commitments and submitting cost claims. Minister Mélanie Joly stated that the government is examining confidential agreements with Stellantis to determine if the relocation announcement violated any terms.
The ability of Ottawa to enforce contracts or recover funds from the automaker, despite providing substantial financial support, remains uncertain. When questioned about the potential to retrieve the funds, Joly did not provide a direct response, highlighting the government’s ability to exert pressure on companies to fulfill their obligations related to job creation. Joly mentioned ongoing discussions with other car manufacturers, including Honda, Ford, and GM, in efforts to address the situation.
The government has extended support and secured agreements with major auto manufacturers to facilitate Canada’s transition to electric vehicles. Following Stellantis’s relocation announcement, Flavio Volpe emphasized the need to send a message to other automakers that there will be repercussions if they concede to the White House’s demands. The prime minister mentioned assurances from Stellantis regarding a new production plan for Brampton, contingent upon the finalization of the Canada-U.S.-Mexico Agreement (CUSMA) up for review next year.
The White House’s imposition of 25 percent tariffs on non-CUSMA-compliant finished vehicles has impacted Canada’s auto sector, prompting Canada to retaliate with corresponding tariffs. However, Trump’s executive order imposing a 25 percent tariff on truck imports, including those from Canada, has further complicated the trade situation. Joly pledged to provide updates on the Stellantis issue by the end of the day and hinted at potential announcements. Subsequently, a parliamentary committee, following pressure from the Conservatives, has agreed to investigate the government’s confidential contracts with Stellantis to safeguard Canadian auto jobs.