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The debate over Canada’s auto industry has become strangely binary. Either Ottawa doubles down on protecting and subsidizing domestic vehicle manufacturing, or it is accused of abandoning one of the country’s most iconic industries. My position is that Canada needs a third option. A pivot to an EV manufacturing future that isn’t just about cranking out passenger cars.
Donald Trump’s tariffs have only reinforced the binary mindset, prompting calls for more government support to preserve assembly plants, supply chains and manufacturing jobs. Few voices in the debate have questioned whether Canada should continue fighting to preserve an industry that has been shrinking for decades.
Carleton University economist Chris Worswick is one of those voices. In a recent Globe and Mail opinion piece and this interview with Energi Media, he argues that Canadians should at least consider an uncomfortable possibility: if the United States no longer wants Canada integrated into its automotive supply chain, perhaps Canada should allow the industry to decline rather than spend billions trying to save it.
His argument is not an attack on auto workers or manufacturing itself. Instead, it is a challenge to assumptions that have guided Canadian industrial policy for generations. Worswick notes that auto manufacturing now accounts for less than one per cent of Canada’s GDP and employment, while the sector has already lost roughly half its production over the past decade as investment shifted toward Mexico and other lower-cost jurisdictions.
Trump’s tariffs may accelerate that decline, but they did not create it.
Rather than replacing American dependence with Chinese investment or even larger government subsidies, Worswick argues Canada should embrace open competition. Consumers would gain access to lower-cost vehicles, particularly electric vehicles from China, while workers and capital could gradually shift toward industries where Canada has stronger long-term advantages. He points to education, advanced services, defence manufacturing and innovative niche industries as more promising sources of future prosperity than attempting to recreate a North American auto industry that may no longer be economically sustainable.
The discussion quickly expands beyond automobiles. It becomes a conversation about Canada’s broader economic strategy. Are governments too focused on protecting incumbent industries instead of encouraging innovation? Does industrial policy increasingly favour large established firms at the expense of startups and emerging technologies?
And as artificial intelligence, electrification and advanced manufacturing reshape the global economy, is Canada preparing for the next generation of competitive industries, or simply trying to preserve yesterday’s?
Whether readers agree with Worswick’s conclusions or not, his arguments force an important question. In an era of profound technological and geopolitical disruption, should Canada’s objective be preserving familiar industries at almost any cost, or building the conditions for whatever industries prove globally competitive next?
I’ll explore some of the third way options in future essays. After all, Canada now has an auto strategy and Ottawa is consulting with stakeholders about how to implement it. Might now be the time for some fresh thinking?
