Canada’s auto industry just got rear-ended by one of the world’s biggest carmakers.
What happened: As part of a US$13 billion investment in U.S. manufacturing, automaker Stellantis announced that it will shift production of the Jeep Compass SUV away from its plant in Brampton, Ontario. It had previously paused operations at that same plant in February.
- When it closed, the plant was undergoing a $1.3 billion retool to produce gas, hybrid, and electric models of the Compass, a plan originally set to be completed this year.
Big picture: In response to the move, Industry Minister Mélanie Joly threatened to sue Stellantis if it does not quickly find a new mandate for the plant, claiming the company would be breaking a deal to maintain its Canadian footprint in exchange for government support.
- Stellantis had promised to find something else to do with the plant, but what that entails, exactly, remains unclear.
Why it matters: Aggressive U.S. auto tariffs were always a thinly veiled cudgel to force more production stateside. This is the biggest sign yet that the plan is working, and the end result could be the collapse of decades of intertwined U.S.-Canada auto manufacturing practices.
- Currently, the auto sector makes up somewhere between 1% and 4% of Canada’s GDP, and a dip in output would absolutely crush large parts of southern Ontario.
Bottom line: In a speech in Toronto last week, U.S. Commerce Secretary Howard Lutnick reportedly said the White House’s stance is “America first, Canada second” when it comes to auto production. Stellantis and other automakers are showing that they have the same priorities.—QH