Prime Minister Mark Carney of Canada announced on Thursday a sweeping plan to offer billions of dollars in incentives and tax breaks for auto industry investment designed to help turn Canada into a global leader in electric vehicles.
The new policies, Mr. Carney said, were meant to transform Canada’s economy and make it less reliant on a single trade partner after President Trump’s economic assaults and threats on Canada’s sovereignty have frayed relations between the two nations.
“We must take care of ourselves,’’ Mr. Carney told reporters at an auto parts factory in Ontario. “We cannot control what others do.’’
Mr. Trump has inflicted significant pain on Canada’s auto industry — which exports about 90 percent of its vehicles to the United States — by imposing a 25 percent tariff on Canadian vehicles. Mr. Trump has said he does not want cars sold in the United States to be made in Canada and wants to drastically increase domestic production.
Canada applied retaliatory tariffs on American vehicles, but gave exemptions to companies that make cars in Canada. But Mr. Trump’s dismantling of the trade policies that have knitted together the North American auto industry along with his measures targeting electric vehicles has led to a sense of urgency for Canada to look for alternative markets.
Mr. Carney agreed last month to open a crack in Canada’s exclusion of Chinese made electric vehicles through a 100 percent tariff that was introduced to match a similar U.S. measure. Canada will allow a small number of Chinese E.V.’s into the Canadian market at a low tariff rate.
The announcement of the Chinese deal was followed by an agreement between Canada and South Korea that may lead to Korean automakers building Canadian factories for vehicles and batteries. Expanding the presence of Asia companies in Canada could ultimately hurt U.S. companies at a time when they are already losing ground in other parts of the world.
Mr. Carney said Canada would still push for a return to free trade in auto and auto parts during this year’s review of the agreement between the United States, Canada and Mexico, but acknowledged that Mr. Trump does not share that objective.
He said that the measures he announced Thursday would “make our industry world leading regardless of the outcome” of those trade talks.
“This is what a confident country does,” Mr. Carney said.
Last month in a widely lauded speech at the World Economic Forum in Davos, Switzerland, Mr. Carney, while not naming Mr. Trump, made clear that the American president had caused an irreparable “rupture” to the world political and economic order and called on other middle powers to form a protective alliance.
He underscored that theme on Thursday, repeatedly emphasizing that Canada was in “active discussions with a range of new investors outside the United States.
The auto assembly and parts manufacturing business is almost entirely based in Ontario, Canada’s most populous province, and employs about 125,000 people. While it was historically dominated by the Detroit-based vehicle companies, all of which have been in Canada for over a century, Toyota and Honda now account for about three quarters of Canadian production.
Since his return to office last year, Mr. Trump’s economic policies have led to the loss of thousands of Canadian auto jobs. Stellantis abandoned a plan to that had been partly subsidized by the Canadian government to build a Jeep model at a factory in Brampton, Ontario and moved production to Illinois. General Motors last week laid off about 700 workers at its pickup truck plant in Oshawa, Ontario and closed a plant that made electric delivery vans in southwestern Ontario.
The leaders of Detroit automakers have also soured public opinion in Canada by appearing to appease Mr. Trump. Last month, Bill Ford, the executive chairman of the car company that bears his family name, took Mr. Trump on a tour of its assembly plant in Dearborn, Michigan. During the visit, Mr. Trump said that the United States no longer needs the trade deal with Canada and Mexico.
“The problem is we don’t need their product,” Mr. Trump said.
Mr. Carney on Thursday officially eliminated a mandate to move to zero emission vehicles by 2035, which had been opposed by automakers. Instead, he introduced tougher emissions standards on vehicles in future years and set an ambitious goal of having electric vehicles make up 90 percent of sales by 2040.
The government is also restoring consumer rebates for electric vehicle purchases, a program that expired last year that will start at 5,000 Canadian dollars or $3,600. Mr. Carney said that those rebates will not apply to Chinese-made E.V.s.
Mr. Carney said that the government would give credits to automakers who build cars in Canada that they can sell to other companies to allow them to import foreign-made vehicles duty free into the country. It will also offer 3 billion Canadian dollars, or $2.2 billion, for plant investments, cut corporate tax rates for zero emission vehicle makers and allow accelerated tax deductions for investments in E.V. plants and equipment.
Ian Austen reports on Canada for The Times. A Windsor, Ontario, native now based in Ottawa, he has reported on the country for two decades. He can be reached at [email protected].
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