Canada signs auto deal with South Korea, further distancing itself from US
Canada announced a new agreement with South Korea aimed at exploring opportunities to bring Korean automotive manufacturing into the country, as Ottawa looks to shield its auto sector from mounting U.S. tariffs. While the deal offered few specifics, it reflects Prime Minister Mark Carney’s broader push to reduce Canada’s economic reliance on the United States following President Donald Trump’s aggressive trade measures, including a 25 percent tariff on Canadian-made vehicles. The move also aligns with Carney’s recent call for so-called middle power nations to strengthen economic ties with one another amid what he has described as a fundamental disruption of the global order. Canadian officials said the agreement could help grow the domestic auto industry, create jobs, and position the country as a leader in next-generation vehicle manufacturing at a time when most Canadian auto production remains heavily dependent on exports to the U.S.
The announcement comes as U.S. automakers have scaled back operations in Canada over the past year, with multiple factories idled, downsized, or abandoned amid tariff pressures and shifting electric vehicle strategies. At the same time, Carney has pursued expanded trade relationships beyond North America, including a recent decision to allow a limited number of Chinese electric vehicles into Canada at low tariff rates, a move that drew sharp criticism and tariff threats from Trump. South Korea’s interest in Canada may also extend beyond autos, as Ottawa weighs bids from South Korean and German firms to supply diesel-electric submarines for the Royal Canadian Navy. While South Korean brands hold a significant share of the Canadian auto market, none currently manufacture vehicles domestically, with their only major footprint being a battery plant in Ontario that has shifted production away from vehicle use due to weak EV demand.
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