Canada said on Friday it would waive a requirement that 20% of all vehicles sold in 2025 be emissions-free, part of a broader aid package aimed at easing pressure on companies facing U.S. tariffs.
The mandate was introduced in 2023 by the Liberal government of former Prime Minister Justin Trudeau. His successor, Mark Carney, said suspending the rule would give automakers financial relief while they contend with punitive U.S. measures, which also target steel and aluminum.
“This will provide immediate financial relief to automakers at a time of increased pressures on economic competitiveness,” Carney told a televised press conference. Ottawa will also launch a 60-day review to identify ways to reduce costs linked to the EV sales requirement.
The Canadian Vehicle Manufacturers’ Association welcomed the decision, saying the mandate imposed unsustainable costs on companies and threatened future investment.
Carney said it was too soon to determine whether Ottawa should lift its 100% tariffs on Chinese-made EVs, imposed last year. On Friday, China extended a probe into Canadian canola imports, a key export for the country.
Carney, who won an April election pledging to diversify away from reliance on the United States, said Ottawa would create a new C$5 billion ($3.6 billion) fund with flexible terms to support firms in all sectors affected by tariffs.
The U.S. measures are “causing extreme uncertainty that is holding back massive amounts of investment,” he said.
Additional measures include a federal procurement policy favoring Canadian suppliers and a new biofuel production incentive, with over C$370 million earmarked for farmers. Carney said no new aid was being introduced specifically for steel and aluminum, though firms in those industries could apply for existing programs.