Canada to sue Stellantis as Trump trade war reshapes production plans

Canada threatened to sue the auto giant Stellantis on the proposed sale of an unused assembly plant in Brampton, Ontario, alleging violations of a federal financing agreement after the automaker announced plans to shift production to the United States amid President Donald Trump’s trade war.

Speaking at a news conference on Thursday, Industry Minister Mélanie Joly said the government had served Stellantis with a formal notice, giving the company 30 days to respond to its concerns or face legal action.

“We sent out a notice of default and basically they have 30 days — otherwise, of course, we will sue them,” Joly told reporters in Toronto.

Joly said Stellantis violated its contractual commitments to the Canadian government and Brampton workers by announcing a deal to sell the factory to armored vehicle maker Roshel earlier in the week. She said the company now “on the hook” for hundreds of millions of dollars because of the move.

Canadian Prime Minister Mark Carney called the situation at the Brampton plant “unacceptable” and a “betrayal” of its workers.

The impasse comes as the United States and Canada remain locked in a bitter trade dispute, with Trump repeatedly pressuring automakers to move vehicle production south of the border.

Stellantis, which owns auto brands including Dodge, Fiat, Chrysler and Peugeot, had scrapped plans to build its Jeep Compass at the Brampton plant and shifted future production to a plant in Illinois due to U.S. auto tariffs and other market pressures.

Stellantis Canada CEO Trevor Longley said in a statement shared with CNBC that the company would return $24 million it received in government support for the original Brampton Assembly retooling plan. This amount, however, is significantly lower than the Canadian government’s estimate of what the company owes.

“We recognize the disappointment and uncertainty surrounding the future of the plant. While our decision to sell the plant represents a change from initial plans for Brampton, the agreement we reached with a Canadian manufacturer paves the way for the facility to be returned to productive industrial use,” Longley said.

“As the largest automotive employer in Canada, this decision also allows Stellantis to focus its resources on maintaining competitive manufacturing operations in Canada in the face of challenging market realities,” he added.

Stellantis said Monday it had agreed to sell the Brampton assembly plant to Roshel for an undisclosed amount.

He also acknowledged his obligations to the plant’s employees and said he remained willing to work with Unifor, Canada’s largest private sector union, to negotiate a settlement to help employees represented by the union.

Stellantis shares have fallen sharply since the start of the year, with its Milan-listed shares falling more than 60% for 2026 so far.

— CNBC’s Michael Wayland contributed to this report.