Volkswagen just postponed its planned Audi production facility in the United States, citing a minor inconvenience called a $2.5 billion tariff bill racked up in just nine months of 2025. The German automaker’s CEO explained that these escalating costs have fundamentally altered the economics of building anything south of the Canadian border. Hundreds of American jobs vanished into the same black hole where coherent trade policy apparently lives.
Meanwhile, Volkswagen is proceeding full steam ahead with its St. Thomas, Ontario “Gigafactory”, projected to become the largest EV battery plant in North America, possibly the world. The facility will pump out batteries for up to one million electric vehicles annually, a production capacity that would make any American state salivate.
Germany’s economics minister traveled to Ottawa in early February and told the Globe and Mail that “the German automotive industry is willing to invest here” and is “in talks to expand our presence” in Canada. Actual investment decisions belong to individual companies rather than governments, obviously, but when a German cabinet minister flies to Ottawa to discuss cars and submarines, the message crystallizes: there’s genuine interest, and it’s growing.
South Korea wants in too. Seoul and Ottawa signed a memorandum of understanding to develop Korean brand production, primarily Kia and Hyundai, with heavy emphasis on EV battery development spanning mining, processing, and manufacturing. A newly established Canada-Korea Future Mobility Industrial Collaboration Forum will “promote opportunities for domestic production of electric vehicles,” according to federal government statements.
Then there’s China, because why not complicate things further. “The recently announced partnership will aim to promote new Chinese joint venture investments in Canada”, reads a Prime Minister’s Office release.
Ottawa sweetened the pot with $3 billion from the Strategic Response Fund and $100 million from the Regional Tariff Response Initiative to help the automotive industry “adapt, grow, and diversify into new markets”.
Industry Minister Mélanie Joly delivered the victory lap: “Canada is an automotive nation and home to world-class vehicle manufacturers. We have cutting-edge technologies, world-class talent, and resources to make the Canadian automotive industry a global competitor”.
Canada might soon counter Trump’s claim that “we don’t need cars made in Canada” by demonstrating they don’t need American-made vehicles either. Ironic, considering Canada has been the primary export market for US-produced vehicles.
