Elon Musk’s company is barred from future incentive programs as Ottawa responds to new tariffs from the Trump administration.
Canada has suspended over 43 million Canadian dollars in electric vehicle (EV) subsidies for Tesla and will exclude the company from future government programs, citing escalating trade tensions with the United States.
As reported by Digi24, the decision comes as U.S. President Donald Trump prepares to impose new tariffs—some as high as 25%—on Canadian and Mexican goods. Canadian Transport Minister Chrystia Freeland announced that all current subsidy applications from Tesla would be individually reviewed, and that the company would be excluded from future rounds of Canada’s iZEV program so long as what she called “illegal and illegitimate” U.S. tariffs remain in place.
Political Timing and Economic Fallout
The move was made just weeks ahead of Canada’s upcoming federal elections, with Prime Minister Mark Carney’s government likely aiming to demonstrate a firm response to U.S. economic pressure. Tesla, led by Trump ally Elon Musk, has been a major beneficiary of Canada’s EV subsidies. In January alone, a single Tesla dealer in Quebec reportedly filed for nearly $20 million in public incentives after documenting over 4,000 vehicle sales in one weekend.
This sudden surge of claims—coupled with the broader trade dispute—has triggered political scrutiny. Toronto had already halted EV subsidies for Teslas used in ride-sharing earlier this month due to similar concerns.
U.S.-Canada Tensions Intensify
The tariffs introduced by the Trump administration are expected to roll out in early April, with automotive products among the top targets. Musk, who now heads the so-called Department for Government Efficiency (DOGE), has been spearheading federal budget cuts and streamlining initiatives from within the Trump administration.
Canada’s decision to target Tesla marks a rare move against a single U.S. company and underscores how political ties and corporate interests are becoming increasingly entangled in the crossfire of North American trade policy.
