Ontario Line trains face uncertainty over tariff costs

Ontario Line trains ordered by the provincial government could become more expensive if Canada’s retaliatory tariffs on U.S. goods are still in force when the driverless electric vehicles cross the border into Toronto.

The federal government announced on Tuesday that roughly 700 U.S. products would face tariffs when entering Canada. The list includes electrically powered rail locomotives, and the Canadian counter-tariffs could apply to the Ontario Line fleet being manufactured in the United States.

Infrastructure Ontario signed a $9 billion contract in 2022 with a consortium that includes Hitachi Rail. The agreement covers trains, rolling stock and maintenance for the Ontario Line, a new downtown relief subway route in Toronto.

Ontario Line trains are being built in Maryland

Hitachi Rail is producing the trains at its Maryland facility. The U.S.-made trains will be shipped across the border to Toronto before the Ontario Line is completed in the early 2030s.

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Exactly what the tariffs might add to the cost remains uncertain. It is not clear when the trains will be purchased and imported, or whether Canada’s current counter-tariffs will still apply at that point. If the measures remain unchanged and Metrolinx or Hitachi is not eligible for a federal tariff exemption, the additional charges could substantially increase the cost of the trains.

Metrolinx did not directly answer questions about the possible tariffs in a statement provided to Global News.

“As with all provincial agencies, Metrolinx always makes every effort to procure from Ontario and Canadian-based companies.”

“We will continue to support our municipal, provincial, and federal partners in responses to the United States tariffs.”

Canada’s Department of Finance, which leads tariff decisions, described the counter-levies as “focused and strategic.” It said targeted exemptions could be applied if a tariff would hurt the domestic economy.

“Requests for remission of the new counter-tariffs will be considered by the Department of Finance to provide targeted surtax relief on an exceptional basis, where necessary to mitigate unintended negative impacts on the Canadian economy.”

Federal tariff exemption remains possible

Critics said the situation was avoidable.

Ontario NDP Leader Marit Stiles, who has repeatedly questioned why a Canadian company did not receive the Ontario Line contract in 2022, said the situation could have been avoided.

“When the province signed this agreement, we sounded the alarm over and over again. Good jobs that would be transformative for Thunder Bay went down south because of choices this government made.”

Alstom, which has facilities in Canada, previously confirmed to Global News that it submitted a bid to build the Ontario Line trains but lost out.

Construction of the Ontario Line is already well underway in Toronto, with tunnel boring machines working beneath the city. The route is not expected to be completed until the early 2030s.

Whether the trains ultimately face the counter-tariffs will depend on when they are imported and whether the measures are still in place at that time.

Context

Canada’s official tariff list goes beyond electric locomotives. It also places a 25 per cent counter-tariff on self-propelled railway or tramway coaches powered from an external source of electricity. The list itself does not establish how the Ontario Line vehicles will ultimately be classified when imported, so their exposure remains conditional. The new counter-tariffs take effect on Sept. 8, 2026, while the federal tariff remission framework remains available for exceptional relief.

The $9 billion Ontario Line RSSOM contract is also broader than the train purchase alone. Infrastructure Ontario says $2.3 billion covers capital costs, while the remaining $6.7 billion includes train costs alongside financing, lifecycle expenses and 30 years of operations and maintenance.

Ontario Premier Doug Ford addressed the possibility of higher prices in Canada resulting from the trade war on Monday.

“It is going to hurt, that’s the cost of war,”

Asked whether Canadian tariffs were also a tax on Canadian people, Ford added:

“We’ll wait it out for two years, even if he lasts two years, but we’ll wait it out, and hopefully (American voters) will come to their senses when they see the pain he’s putting on the American people.”