An order-in-council dated February 26 shows Canada raised the tariff-free import quota of an unnamed automaker after the company reported stronger-than-expected vehicle sales and higher domestic production in 2025.
The adjustment marks the first known upward revision under a remission framework that has so far been used primarily to penalise carmakers that cut Canadian output.
Industry Minister Mélanie Joly, asked about it at a media availability in Ottawa, mentioned Honda and Toyota without confirming which company had applied.
“We will actually support those who invest in us,” she said. “So when Honda and Toyota increase their production in Canada, we will make sure that they have greater market access. Period.”
The automaker was not identified in the order, which cited confidential financial concerns.
The order, which was not accompanied by a government announcement, was reported by The Canadian Press on Monday.
The Remission Framework
The United States Surtax Remission Order (Motor Vehicles 2025), established under section 115 of the Customs Tariff, allows five automakers that manufacture vehicles in Canada — Ford, GM, Honda, Stellantis and Toyota — to import a set volume of US-made, USMCA-compliant vehicles without paying Canada’s 25% counter-tariff.
Quotas are reviewed quarterly and are contingent on companies maintaining Canadian production levels and following through on planned investments.
Automakers that exceed their quota face the full counter-tariff on the additional vehicles.
The framework has to date been applied most visibly as a disciplinary tool.
In October 2025, the government cut Stellantis‘s quota by 50% after the company abandoned plans to reopen its assembly facility in Brampton, Ontario.
It cut GM‘s quota by 24% following reduced Canadian output and the closure of its electric delivery van plant in Ingersoll, Ontario.
Ford, Stellantis and GM are therefore the least plausible candidates for an upward revision, leaving Honda and Toyota as the probable applicants — though this is inference from elimination, not confirmed by the government.
Honda in Canada
Honda operates a single Canadian manufacturing facility — Honda of Canada Mfg. (HCM) — in Alliston, Ontario, where it has produced vehicles since 1986.
The plant employs 4,200 associates across three facilities on an 890-acre site, with annual capacity of more than 400,000 vehicles.
It currently builds the Civic and CR-V, and produced its 11 millionth Canadian vehicle in October 2025.
Honda has described itself as Canada’s second-largest auto manufacturer by volume, with approximately 69% of Honda vehicles sold in Canada built domestically.
In April 2024, the company announced a C$15 billion EV value chain investment in Alliston, including a new EV assembly plant and battery plant, with production targeted to begin in 2028.
Toyota in Canada
Toyota operates three plants in Ontario — two in Cambridge and one in Woodstock — under Toyota Motor Manufacturing Canada (TMMC).
The facilities employ more than 8,500 people and together have the capacity to produce over 500,000 vehicles annually, making TMMC one of Toyota’s top-producing global manufacturing facilities.
In 2025, TMMC assembled more than 535,000 vehicles.
Its Canadian plants build the RAV4, RAV4 Hybrid, Lexus RX and Lexus NX, and started production of the all-new sixth-generation RAV4 in Woodstock in January 2026 following a C$1.1 billion investment.
Toyota Canada posted an all-time sales record of 249,445 vehicles in 2025.
The brand has previously described the remission framework as a “missed opportunity to support Canadian manufacturing,” arguing on the record that it benefits net importers more than the country’s largest vehicle producers and exporters.
The Broader Review
Finance Canada spokesman Benoit Sabourin said Monday that Ottawa is reviewing the remission programme to find additional ways to incentivise investment in Canadian production.
The review, launched February 27, is open for submissions until April 13, 2026.
Sabourin described the framework as “unique to the automotive sector” and said it relies on companies maintaining Canadian production and following through on planned investments.
Finance Minister François-Philippe Champagne, who launched the consultation on February 27, said the government aims to “sharpen our tools to drive production and secure long-term investment to build the next generation of vehicles, right here in Canada.”
Joly, speaking at Linamar’s Guelph facility last month, said the auto strategy would “strengthen the sector here at home, invest in the growth of industry leaders, and ensure Canadian workers are building the vehicles of the future.”
Canada dropped the bulk of its retaliatory tariffs against the United States in September 2025 but has maintained the 25% counter-tariff on US-made vehicles that do not comply with USMCA, as well as 25% counter-tariffs on US steel and aluminum.
The current remission order covers imports between April 9, 2025 and April 8, 2026.
Canada’s auto sector supports more than 500,000 workers and contributes over C$16 billion annually to GDP.
The country produced just over 1.2 million passenger vehicles in 2025 — down roughly a third from 2019 levels, and the weakest output among the three USMCA partners.
BMO, one of the country’s largest banks by assets, has recently warned of permanent damage as production plunged while demand remained stable.
The USMCA agreement is due for review by July 1.
