The Canadian government has announced a nationwide suspension of all federal subsidies for Tesla vehicles, escalating a trade dispute with the United States over tariffs imposed by the Trump administration. In addition, Tesla will be excluded from future rebate programs while these tariffs remain in place, Transport Minister Chrystia Freeland confirmed.
“No existing applications for rebate payments will be completed until each claim is individually investigated,” Freeland said in a statement, directing Transport Canada to withhold funding from Tesla under the Incentives for Zero-Emission Vehicles (iZEV) program. The freeze affects approximately C$43 million (€39.8 million) in government incentives.
See also: British Columbia Excludes Tesla from EV Charger Rebate Program Amid US-Canada Trade Dispute
The move follows similar actions by several Canadian provinces. British Columbia excluded Tesla charging products from its EV charger rebate initiative in March, while Toronto ended incentives for Tesla taxis and limousines in February. Nova Scotia also announced on Wednesday that it would drop rebates for Tesla vehicles.
The dispute comes amid heightened tensions between Canada and its largest trading partner, as the U.S. introduces new tariffs on Canadian imports. While Tesla has not publicly responded to the Canadian government’s decision, CEO Elon Musk’s close ties with the Trump administration have drawn scrutiny, with some observers suggesting Tesla is being singled out over other U.S. automakers.
See also: Tesla Sales Drop in Canada Amid EV Incentive Cuts and Price Hikes
Tesla shares have declined by roughly 50% since December 2025, facing pressure from multiple factors, including competition from Chinese EV makers and investor sell-offs. Earlier this month, the company sent a letter to the U.S. Trade Representative warning that vehicle tariffs could harm exports by triggering retaliatory measures.
“Past trade actions by the United States have resulted in immediate reactions by the targeted countries, including increased tariffs on EVs imported into those countries,” Tesla wrote. “These measures have increased costs for Tesla vehicles both domestically and in export markets, weakening the competitive position of U.S. manufacturers.”
See also: Canada Weighs 100% Tariff on Tesla Amid U.S. Trade Dispute; Calls Grow to Open Market to Chinese EVs
With tensions escalating, industry analysts warn that prolonged trade barriers could impact Tesla’s Canadian sales and disrupt the broader North American EV market.
Source: cbc.ca