Canada’s Auto Sector: Rethinking Strategy in a Politicized Global Industry

As we turn our attention to the Canadian auto sector and manufacturing, League Members are encouraged to review the opinion of League expert Jack Mintz.

Recently, he has argued that targeting favoured industries with subsidies or tax incentives—such as accelerated depreciation—can lead to investment in low-return projects. He likely favors reducing the general corporate tax rate as a more efficient way to stimulate investment and move away from government attempts to pick winners. He is also not supportive of historical bailouts or subsidies in the Canadian auto industry, and has written on this point.

In reading his work, consider what stands out as an interesting discussion point in light of current developments—not just in Canada’s auto industry as it navigates tariffs with the U.S., but also in trends emerging in Germany, China, and others.

Certainly a turbulent industry. What do you see as the next hurdle—or opportunity—for the Canadian automotive sector?

1. What structural parallels exist between Canada and Australia when it comes to automotive manufacturing? Australia ultimately abandoned the sector and concentrated on resource development. Was that a strategically rational choice, and which elements of that decision are most relevant — or cautionary — for Canada as it evaluates its own automotive strategy?

2. If China continues to capture significant EV market share in Europe, what could be the economic consequences for the U.S.?

How might China’s lower cost structure in the European market affect competitive dynamics, and what implications could this have for power relations within North American manufacturing? Does Canada potentially gain an opportunity with either the U.S. or China?

3. With tariffs set to drive up U.S. input and manufacturing costs in the short term, what does this say about an industry historically reliant on subsidies, favorable loans, liquidity support, and bailouts?

Considering trends in Germany, China, and Japan, where governments actively support their automotive sectors, is the global auto industry driven more by politics than by economic efficiency?

For Canada, if the sector is perpetually in a defensive, reactive position relative to the U.S., should we continue to support it even at an economic loss—if only to serve as a shield, given how easily the U.S. can score political points in this industry? And if we were to abandon it entirely, would pressure simply shift to other sectors of our economy?