Liberal Party Leader Mark Carney promised a C$2 billion ($1.4 billion) “strategic response fund” to help Canadian auto manufacturing and strengthen a supply chain that’s under threat from U.S. tariffs. 

Carney, who became Prime Minister less than two weeks ago, said a government led by him would try to build an “all-in-Canada” network for auto parts, working with industry to make more parts in the country and limit the number that have to cross the Canada-U.S. border during production. But he gave few details on how that would work. 

“On average, auto parts cross the border six times before final assembly. In a trade war, that’s a huge vulnerability,” Carney said March 26 at an election campaign stop next to the Ambassador Bridge, which connects Windsor, Ontario, with Detroit.

U.S. President Donald Trump announced late on the afternoon of March 26 that tariffs of 25% will be imposed on all imported cars. The tariffs will apply to finished cars and trucks that are shipped into the United States, including those made by U.S. auto companies whose automobiles are made overseas. That constitutes a major threat to the highly integrated North American vehicle supply chain. Most of the vehicles Canada produces are exported to the U.S.

Read More: Trump Sets 25% Tariff on All Imported Automobiles

Carney called a snap election for April 28, trying to secure a mandate from voters after he won a Liberal Party leadership contest to replace Justin Trudeau. Carney and his chief rival, Conservative Leader Pierre Poilievre, have been battling for votes from blue-collar workers at risk from Trump’s tariffs.

Carney also promised to “maximize” Canada’s steel, aluminum and critical minerals sectors. He pledged government funding to build transmission and transportation networks to link extraction sites to rail lines and roads, as well as a “one project, one review” system that would speed environmental assessments.

Mark Carney, Canada’s prime minister. Photo: Bloomberg

A Liberal government would prioritize Canadian vehicles in procurement in order to grow the domestic auto industry and create more union jobs, he said. 

Trump’s tariffs have sparked urgency in Canada to find new export markets. China’s ambassador told Bloomberg News on March 25 that the Asian nation is interested in expanding trade with Canada if the Canadian government drops restrictions on Chinese investment. 

Under Trudeau, the government cracked down on Chinese involvement in Canadian critical minerals and technology projects. It also essentially matched the Biden administration’s tariffs on Chinese electric vehicles, aluminum and steel — prompting China to roll out retaliatory levies on Canadian canola, pork and seafood this month.

Carney on March 26 dismissed accusations from Poilievre that he is “beholden” to China because of past business dealings in the country when he was working for Brookfield Asset Management Ltd. China is Canada’s second-largest trading partner, he noted, and said the countries need to engage with each other on their current trade dispute. 

“When you think about the auto sector and the future of the auto sector, we’ve got to understand where China is, where China’s going, whether or not there’s any room for partnership in that,” he said.

“We want to diversify with like-minded partners,” he added, highlighting that he traveled to Europe in his first days as prime minister to strengthen trade ties with France and the United Kingdom. 

“There are partners in Asia that we can build deeper ties with, but the partners in Asia that share our values don’t include China. There’s certain activity that we could have with China. We obviously do have a large amount of trade with them, but we have to be very careful, very deliberate, and they need to meet Canadian standards.”