Canada has been a convenient base for producing vehicles for larger markets not a true manufacturing powerhouse.

Ford’s Canadian manufacturing history began in 1904. Gordon McGregor, owner of Walkerville Wagon Works, approached Henry Ford and secured a deal to manufacture Fords in Canada, thus establishing Ford Motor Company of Canada. This was Ford’s first international expansion. Ford is Canada’s oldest automaker.

Duty-free access

A key factor driving Henry Ford’s interest in the deal was duty-free access to the vast British Empire. His Detroit factory faced high duties on exports to British Empire territories. Walkerville produced 117 autos in year one and soon had its first export sale to India. Ford of Canada led the growth of Ford in the British Empire, outside of Great Britain and Ireland, eventually establishing subsidiaries in South Africa, India, Australia and New Zealand.

Convenience (proximity to Detroit) and duty-free access to the vast British Empire played a key role in bringing Ford to Canada.

As the British Empire shrunk, Trade Agreements allowed Canadian plants to export vehicles at low duty rates to Commonwealth nations, augmenting the small domestic market. To keep Canadian operations viable, Ford, GM and Chrysler developed lower cost Canadian-exclusive models. Examples were the Pontiac Laurentian and Parisienne; Pontiac styling and names paired with cheaper Chevrolet frames, chassis, and engine components.

“He expressed concern about the entry of Chinese EVs to the Canadian market as many will be from low-cost, state-subsidized, non-market-oriented producers.”

– Peter-James Gregory

Erasing the border

The 1965 USA / Canada Auto Pact effectively erased the border for the “Big Three” automakers, gradually killing off Canadian-exclusive budget models and transforming Canadian factories from low-volume assembly lines into specialized, high-output export facilities. The Auto Pact fueled the growth of auto manufacturing in Canada by allowing utilization of existing Canadian plants to handle increased demand from the U.S. market.  Canada was a convenient manufacturing location, with established manufacturing infrastructure.

In the 1980s, the Auto Pact also helped Canada attract auto plants from Honda and Toyota. These manufacturers met the Auto Pact 50% North American content for duty-free access to the USA market as they already had manufacturing facilities in the USA and an existing community of North American suppliers. Honda opened its Ohio plant in 1982 to manufacture Accords. Toyota opened its California joint venture with GM, New United Motor Manufacturing, Inc. (NUMMI) in 1984 to produce Chevy Novas and Toyota Corollas.

Japanese entry

The Japanese invested to bypass rising trade tensions and potential import quotas or extra tariffs on Japanese vehicles entering North America. Canada offered lower relative operating and production costs due to a weaker Canadian dollar, lower overall labour compensation costs compared to the U.S., duty free access to the U.S. market, plus close proximity to the USA. Canada was a convenient manufacturing location.

Canada’s labour compensation cost rose over time and operating and production costs rose. Thus, Canadian governments provided billions of dollars of “incentives” to auto manufacturers to maintain or grow auto manufacturing in Canada.

90% of the autos manufactured in Canada are exported to the USA. Canadian auto manufacturing exists to supply the USA. Canada only has branch plant auto manufacturing. Convenience drives auto manufacturing in Canada; proximity to USA and duty-free access to the USA.

In February 2026, the Japanese Ambassador said continued access to the U.S. market, under CUSMA, is essential for current and potential increased Japanese investment in auto manufacturing in Canada.

Economic case

In June 2026, the President of Honda Canada said CUSMA provides the economic case for large-scale automotive manufacturing in Canada. Without CUSMA, manufacturing is difficult to justify and sustain. He expressed concern about the entry of Chinese EVs to the Canadian market as many will be from low-cost, state-subsidized, non-market-oriented producers.

In June 2026, Brian Kingston, President of The Canadian Vehicle Manufacturers’ Association illuminated the reality that 90% of Canadian production goes to the USA. The foundation of auto manufacturing is access to the USA. Diversification is not an option as other large markets have local assembly plants. Canada’s market is too small to support the current manufacturing footprint. There is no Canadian auto manufacturing industry without the USA, so its future, and the hundreds of thousands of jobs that it supports, depends on the USA. Canadians must wake up to reality…

Bio:    Peter-James Gregory is an Entrepreneur, Car Guy and retired tire industry professional with a history of driving growth and creating value in the tire and automotive sectors. You can reach him here