Summary
This report outlines the current state and future expectations of the Canadian automotive industry as it faces significant challenges due to trade tariffs and supply chain disruptions. In 2025, Canadian vehicle sales reached a post-pandemic high, driven by easing financial conditions and pent-up demand, despite a decline in production of 5.4% year-on-year. The report anticipates a further decline in new vehicle sales by 4.3% in 2026, as trade uncertainties persist and the effects of tariffs continue to impact the industry. The document details the implications of the first review of the Canada-United States-Mexico Agreement (CUSMA) and the potential for material revisions that could affect trade relations. It also discusses the Canadian government's efforts to diversify trade, including a new agreement with China allowing a fixed quota of electric vehicles to be imported. The report emphasizes the need for the automotive sector to adapt to ongoing trade challenges and the importance of potential investments from foreign manufacturers.
