Shifting demand toward light trucks—Canadian automakers continue to adjust their operations to reflect the U.S. market’s growing preference for light trucks over passenger cars. The shift to high-margin and high-volume light trucks in Canadian automakers’ product lineup will help offset the impacts from unit sales declines.

Reduced trade uncertainty—Trade relations in North America improved in recent weeks, with the U.S. removing tariffs on Canadian steel and aluminum and abandoning its threats to impose new tariffs on Mexican goods. Moreover, Mexico became the first country to ratify the Canada–United States–Mexico Agreement (CUSMA).

Growing concerns over emission standards—The U.S.’s vehicle emission regulations are in limbo and could result in a bifurcated U.S. vehicle market with two different standards for vehicle emissions, which would weigh on future investments in the industry.