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By Rich Percival
Associate News Editor
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Canadian Prime Minister Mark Carney has warned he will not accept a trade deal with President Donald Trump that threatens Canada's automotive industry, as Ottawa battles to prevent the sale of a major car factory following the transfer of production to the United States.
Speaking at a press conference in Manila on Saturday ahead of the Association of Southeast Asian Nations (ASEAN) summit, Carney said protecting Canadian manufacturing jobs remained a fundamental condition of any agreement with Washington.
"This government will not settle for a deal with the United States that is not consistent with a viable Canadian auto sector," he told reporters.
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His warning comes amid an escalating dispute with multinational automotive manufacturing corporation Stellantis, which has agreed to sell its Brampton assembly plant in Ontario to Canadian armoured-vehicle manufacturer Roshel.
The automaker abandoned plans to manufacture the Jeep Compass at the facility and subsequently announced that production would move to Illinois, leaving more than 2,000 Canadian workers laid off amid Trump's trade war.
Carney said the future of the auto industry remained one of the most difficult issues in negotiations with Washington, although progress was being made. "We're making progress. We're not there yet," he said.
Canada suspended trade negotiations in August after last-minute U.S. demands that Ottawa considered unacceptable. Washington subsequently imposed 50 per cent tariffs on about $20 billion in Canadian goods, prompting retaliatory tariffs by Canada in September. The countries have since resumed discussions.
Canada Battles Stellantis Over Factory Sale
The Canadian government has given Stellantis 30 days to address alleged breaches of a funding agreement or face potential legal action to recover hundreds of millions of dollars.
Ottawa committed up to C$529 million ($370.6 million) in 2022 to help the company retool its Brampton and Windsor plants for electrified vehicle production.
Canadian Industry Minister Mélanie Joly accused Stellantis of failing to honour its commitments after the company abandoned planned production at Brampton without identifying a replacement vehicle.
She said: "When it comes to Stellantis, our position is clear: they cannot close the plant."
Stellantis has offered to repay C$24 million ($17 million) in federal government funding associated with the Brampton project, but Canadian officials insist the company could owe substantially more.
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Trying To Persuade Stellantis To Stay
Carney confirmed that Ottawa and Ontario were working on an "aggressive package" aimed at persuading Stellantis to reconsider the sale.
He said he had discussed the strategy with Ontario Premier Doug Ford the previous weekend.
"Make no mistake, the expectation is that Stellantis fully respects its engagements to the workers and to Canada," Carney said.
Stellantis maintains that the sale would return the factory to productive use, while Roshel says the site could eventually support more than 2,000 jobs and has promised former plant employees priority consideration when hiring begins.
Meanwhile, Conservative Leader and Leader of the Canadian House of Commons opposition, Pierre Poilievre, criticised the government's handling of the dispute, calling for Joly to be dismissed over the loss of Canadian auto jobs.
Speaking earlier this week, he accused the Liberal government of costing Canadians jobs and failing to hold Stellantis accountable.
Canada Pursues New Trade Deals in Asia
Carney's warning to Washington coincided with the announcement of two trade breakthroughs in Asia as his government seeks to reduce Canada's economic dependence on the United States.
Negotiations for a free trade agreement with the Philippines have concluded, with both countries working towards signing it in 2027.
Ottawa says the agreement could help triple Canadian exports to the Philippines by 2035, particularly benefiting agriculture and forestry businesses.
Canada has also substantially concluded negotiations for a separate free trade agreement with the Association of Southeast Asian Nations (ASEAN).
The agreement would give Canadian businesses greater access to a market of almost 700 million people, with an economy worth nearly C$6 trillion.
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Once implemented, Ottawa estimates it could add nearly C$2 billion ($1.4 billion) to Canada's economy and create almost 14,000 jobs, particularly in agriculture and manufacturing.
The government hopes to sign the ASEAN agreement in 2027, although further negotiations and ratification will be required before it takes effect.
"Two agreements in one year: that is the speed and ambition this moment demands," Carney said in a statement.
Carney attended the European Political Community summit in Ireland before traveling to Manila for the ASEAN summit. He will also attend the Francophonie Summit in Cambodia and the Asia-Pacific Economic Cooperation summit in China, where he is scheduled to meet Chinese President Xi Jinping.
US Trade Talks Continue
Carney also revealed that he had held a lengthy telephone conversation with Trump before departing for Asia.
The call included US Trade Representative Jamieson Greer, White House Chief of Staff Stephen Miller and other officials.
"There is the possibility of a bilateral deal, but we're not there yet," Carney said.
He argued that American manufacturers also had much to lose from the breakdown of the longstanding relationship between the two countries' auto industries.
For decades, factories and suppliers on both sides of the border have relied on integrated production networks, with parts crossing between Canada and the United States during vehicle manufacturing.
Carney said the long-term competitiveness of the American auto industry depended partly on maintaining close ties with Canadian manufacturers.
Asked whether a three-way meeting with Trump and Mexican President Claudia Sheinbaum could help resolve trade disputes, Carney replied: "Yes, there's always value in getting together and trying to work out common solutions."
However, he added: "I'm not expecting a meeting in the very short term."
Carney said reaching a stable trading relationship would benefit both countries, adding that an agreement would be "in the interests, of course, of Canadian workers, [the] Canadian auto sector, but very much the U.S. as well."
Speaking to CNBC on Friday, Treasury Secretary Scott Bessent said he was optimistic that the United States could reach a trade agreement with Canada.
However, he did not provide details of any prospective agreement or indicate when one might be announced.
Contact Newsweek editor on this story: Edward Pearcey.
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