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- Canada will review its EV mandate, scrapping the 2026 target of 20% zero-emission vehicle sales while keeping the 2035 net-zero goal nominally intact.
- A new “Buy Canada” procurement policy will prioritize domestic suppliers in federal contracts, with rollout beginning this fall and full implementation by spring 2026.
- The nine-part strategy includes targeted relief, such as a $5 billion Strategic Response Fund, increased farm loan limits, support for displaced workers, and a trade diversification plan to reduce reliance on U.S. markets.
Prime Minister Mark Carney rolled out a sweeping nine-part strategy designed to shield Canada’s economy from the fallout of new U.S. tariffs, while also signaling flexibility on the country’s electric vehicle (EV) sales mandate.
The announcement, made after a two-day cabinet retreat in Mississauga, comes as Canada faces escalating trade tensions with Washington. President Donald Trump’s tariffs, targeting auto manufacturing, agriculture, and other key sectors, have revived fears of a repeat of the economic strain seen during earlier trade disputes.
Rethinking Canada’s EV Mandate
An electric vehicle (EV) is a vehicle that uses one or more electric motors for propulsion.
One of the most striking elements of the plan is a review of Canada’s EV sales targets. Ottawa’s 2026 interim goal, 20 percent of light-duty vehicle sales being zero-emission, will no longer apply.
Instead, the government will reassess the timeline, though the broader commitment to 100 percent zero-emission sales by 2035 remains on paper.
Automakers, already contending with Trump’s auto tariffs, have argued that rigid mandates could undermine competitiveness. Industry groups have been pushing for more flexible policies, warning that Canada risks falling behind if costs rise and supply chains remain constrained.
“Buy Canada” Policy
Carney also confirmed the government will introduce a “Buy Canada” procurement policy across federal institutions.
Modeled in part on U.S. President Joe Biden’s “Buy American” push, the policy will prioritize domestic suppliers in government contracts and funding programs. The first elements could be in place by October, with full rollout by spring 2026.
Economists say the move could bolster Canadian manufacturing but warn it risks further trade friction with the U.S., which remains Canada’s largest export market.
A Fragile Balancing Act
Prime Minister Mark Carney leaves the stage after the Liberal Party’s election night event at the TD Place Arena in Ottawa early Tuesday. (Photo: CBC / Evan Mitsui)
Carney’s announcement underscores the delicate balancing act facing Canada: shielding its economy from U.S. protectionism while avoiding retaliatory measures that could escalate tensions. The trade relationship is deeply intertwined—roughly 75 percent of Canadian exports head south of the border.
Analysts note the government’s willingness to revisit its EV mandate reflects growing recognition that industrial policy cannot be divorced from trade realities. “Canada is sending a signal: competitiveness comes first,” said one Toronto-based trade economist.
Still, critics warn that loosening EV targets risks slowing progress on climate goals. Environmental groups have already urged Ottawa not to backtrack on its 2035 commitment.
Outlook
With Trump’s tariffs reshaping the trade landscape, Carney’s nine-part strategy is a bid to buy time and stability. But much depends on how Washington responds, and whether Canada can successfully accelerate diversification into European and Asian markets.
For now, the message is clear: Canada is preparing to chart a more self-reliant course, even if it means recalibrating signature climate and industrial policies along the way.
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