CUSMA Called “Critical Condition” for Boosting Japanese Auto Manufacturing in Canada, Ambassador Says

By: Ebenezer Adu-Gyamfi / Emmanuel Ayiku for GhanaianNewsCanada 28/2/2028

Canada’s role in the North American automotive industry — particularly as a hub for Japanese and other foreign automakers — hinges on the continued strength and predictability of the Canada–United States–Mexico Agreement (CUSMA), according to a senior Japanese ambassador speaking to Canadian media.

In remarks highlighted by CTV News, the ambassador described CUSMA as a “critical condition” for encouraging further investment by Japanese automakers in Canada, particularly in vehicle manufacturing and supply-chain integration.

A Cornerstone for Auto Investment

CUSMA — the successor to the original North American Free Trade Agreement (NAFTA) — governs much of the region’s tariff-free trade and sets rules of origin and labour requirements that determine whether vehicles and auto parts can move freely across borders without punitive duties.

For decades, integrated auto production across Canada, the United States and Mexico has relied on CUSMA’s framework. Tens of billions of dollars of investment by global manufacturers, including Japanese companies such as Toyota and Honda, have flowed into Canadian plants largely because of the rules that facilitate seamless cross-border manufacturing and export.

The ambassador’s comments underscore how important that framework remains to foreign investors: uncertainty around CUSMA’s future — particularly amid recent trade tensions and annual review talks — could influence decisions by automakers weighing where to build new facilities or expand existing operations.

Japanese Automakers in Canada

Japan-based automotive firms have established a substantial presence in Canada, producing popular models and supporting local supply chains. Their factories in Ontario and other provinces employ thousands of workers and source components from Canadian suppliers, helping anchor part of the country’s manufacturing base.

However, any weakening in CUSMA’s tariff-free provisions or regulatory assurances could make Canada a less attractive location for future auto investment, critics say. With global automakers evaluating sites worldwide, policy stability is often cited as a top priority for long-term capital commitments.

The Stakes of CUSMA Review

Canada, the United States and Mexico are currently navigating periodic reviews of CUSMA’s terms. These reviews can involve discussions over updating rules, addressing disputes and refining labour and content requirements for key sectors like automotive manufacturing.

Business groups and industry decision-makers have warned that prolonged uncertainty over CUSMA could dampen investment sentiment. Because the auto sector is deeply integrated across North America — with parts, labor and assembly often crossing borders multiple times — changes to CUSMA can ripple across the entire industry.

Critics of recent trade policies have also argued that tariffs and trade friction — particularly between the U.S. and Canada — underscore how crucial CUSMA’s stability is to partners like Japan, which rely on predictable, open markets for their operations.

Looking Ahead

With negotiations and reviews on the horizon, the automotive sector and economic observers will be closely watching how CUSMA evolves. Maintaining robust, predictable trade rules is seen by many — including foreign ambassadors and industry leaders — as indispensable to attracting new manufacturing investment and preserving Canada’s role in the global auto assembly landscape.

Whether those assurances translate into new plants, technologies or expanded facilities in Canada could depend heavily on how political leaders address CUSMA’s future — and how trade partners respond to calls for greater clarity and consistency in North America’s trade rules.