Jan. 26, 2026 | Trump threatens Canada with 100% tariffs; AWS on AI timelines

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Welcome to Daily Drive. For Monday, January 26, 2026, I'm Kellan Walker in Las Vegas. Today on

the show, Trump threatens Canada with 100% tariffs over its China EV deal. VW pumps the breaks on

plans for an Audi factory in the U.S. and average monthly car payments hit a record $772. Plus,

AWS's Oscar Tolamshu explains how AI is compressing vehicle development timelines from

eight years to just two or three. It used to be eight to 10 years before it actually comes to life.

Now it's probably four to five years, but when you look at some of the vehicle makers coming from

China, now it's two to three years. Let's run through all the news you need to know to keep up

in the auto industry. President Trump is threatening Canada with 100% tariffs over a new

trade agreement with China that includes electric vehicles. Trump says if Prime Minister Mark Carney

thinks Canada can become a drop-off port for Chinese products entering the U.S., he's mistaken.

Here's what's happening. Canada agreed to slash its tariff on Chinese-made EVs from 106%

down to just over 6%. Capped at 49,000 vehicles annually. In exchange,

China is lowering tariffs on Canadian agricultural exports like lobster and canola.

Carney insists the deal doesn't violate the continental trade pack with the U.S. and Mexico,

saying Canada has no intention of pursuing free trade with non-market economies.

We'll have more on this story in a minute with automotive news Canada's Greg Lason.

Volkswagen Group is pumping the brakes on plans for a U.S. Audi factory.

That's unless tariffs come down. CEO Oliver Bloom tells German media that European

auto tariffs already cost VW $2.5 billion in just nine months last year.

He told Hondosblot, quote, given an unchanged tariff burden, large additional investment

cannot be funded. Audi has been eyeing American production since 2023, initially drawn by subsidies

that made the math work. The company was considering three potential locations,

including VW's Chattanooga plant and Scouts South Carolina facility under construction.

And new car buyers hit another painful milestone in the fourth quarter. According to Edmonds,

the average monthly payment reached a record $772 and one in five borrowers are now paying $1,000

or more each month. Edmonds Ivan Drury says the numbers reflect the financial strain buyers

faced all year, but there are some early signs of relief ahead. Interest rates are dropping,

prices are stabilizing, and more off lease vehicles are hitting the used market.

Joining me now to discuss Trump's threat against Canada is Greg Lason, Digital and

Mobile Editor for Automotive News Canada and host of the Automotive News Canada podcast.

Greg, welcome back to Daily Drive. Good to be back. So Greg, Trump is threatening 100% tariffs

if Canada becomes a, quote, drop off port for Chinese EVs. How realistic is that characterization

and what do you think is really going on here? I mean, it's realistic in the sense that it's a

drop off port for Canadian consumers. I don't see this being an export business where China

drops off 49,000 EVs in Canada and then somehow they are sent to the United States. I just don't

see that happening. In fact, there's a possibility, and we've heard US politicians talk about it,

that a Canadian consumer who buys one and is a resident of Canada might not be able to cross

the border in their Chinese EVs to visit America. So that's within the realm of possibilities. So

thinking that this is some kind of nefarious scheme to supply the United States with Chinese EVs

is not entirely accurate. Look, further down the road, if we start building Chinese EV brands in

Ontario, that becomes a possibility if I assume they stay compliant with the USMCA and they are

deemed secure enough by both the Canadian and US federal governments. That's a possibility,

but that is five to 10 years down the road. Right now in the immediate future, I see

that not to be the case. What's really going on, I think, is everyone involved in this back

and forth in these barbs and in these threats is best positioning themselves for the renegotiation

of the USMCA deal. That is up for mandatory joint review on July 1st of this year,

and if they agree to renew the agreement, it will be in place for 16 years. If they don't,

it's up for review annually, and I can't see the auto industry standing for an annual review of

this thing given how things have been over the last year, year and a half in terms of product

planning, rollouts and investment. Well, Greg, you bring up USMCA and the review talks are now

starting. How do these two things intersect? So I think what Mark Carney has done, and there are

some in the political analysis business, we'll call it, who suggest that Mark Carney is trying to

rile up Donald Trump to strike fear in Canadians to get Carney reelected should he go to the polls

at some point this year. So there's a political aspect to this in Canada as well. He did really

well painting Trump as the boogeyman to Canadians last year when he won the election, and there is

a prevailing thought that that's what he's doing again. That said, it's also possible that he is

trying to create some new ties with China, although not a free trade deal, but a market that Canada

can access so he can sit down at the table and say to Trump and his team, hey, if you don't want us,

China does. That's fine. And so I think a lot of this is negotiating tactics. So then Trump comes

back with his 100% tariff threat, which we've heard in the past at 10% in October when Premier

Doug Ford ran an ad in the United States that upset Donald Trump. We've heard him

make these bombastic claims about the tariff size last year and nothing came to fruition.

This is all positioning for when they sit down across the table from each other to talk USMCA.

Both sides have something critical and substantial to either remove or push forward at that negotiating

failure. One last thing, Greg, does the Canadian government have any national security concerns

about these 49,000 Chinese EVs coming into the country? I'll say this. This is how I answer

this question every single time it's asked me. Canada has banned Huawei cell phones from connecting

to its 5G network. Canada has banned TikTok from being installed on any government-issued device,

and Canada almost sided with the United States in a full ban on Chinese EV hardware and software

being used in any North American manufacturing. So yes, we have security concerns about Chinese

technology. Why wouldn't they have concerns about Chinese technology in Chinese electric vehicles?

They have to have some concern, but they're really not speaking about it right now. It is a small

number, and I've heard people in the industry saying if Transport Canada is going to safety and

regulate these vehicles, it must also look at cybersecurity of these vehicles. So that is

something that might come up in the homologation process to get those cars legalized in Canada for

sale. Greg Lason, always insightful. Thank you so much for joining me. Anytime. Coming up next,

AWS's Oscar Tolamshu describes how AI is compressing vehicle development timelines

and why software-defined vehicles will actually extend the lifespan of cars,

rather than shorten it. That's next on Daily Drive.

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Welcome back to Daily Drive. I'm Kellan Walker.

Artificial intelligence is dramatically compressing vehicle development timelines,

what used to take 8 to 10 years now takes 4 to 5 for most automakers, and just 2 to 3

for some Chinese manufacturers. Osgur Tolumshu is general manager for automotive and manufacturing

at Amazon Web Services. He spoke with automotive news tech and innovation reporter Molly Boygon

at CES in Las Vegas for the Shift podcast. Here's an excerpt from that conversation.

I would love to hear you just kind of explain a little bit about how important you think AI is to

some of the innovations and transformations happening in the automotive space.

It has had a profound impact, especially in the last couple of years. I think it has been around

for a number of years, but I think in the last couple of years it has had a big impact.

In Amazon, we look at different parts of the value chain, and the way we look at it is the

vehicle journey and the customer journey in a way. So if you look at the customer journey

starting with sales and marketing, how you actually go to a website, configure a vehicle,

check out different options, the whole buying experience, and then when you start using it,

leveraging of the different applications in the vehicle and the after sales and all that,

the vehicle journey is more about the vehicle being manufactured on the shop floor,

the ADAS, AV functionality, infotainment. If you look at different parts of it, I think in

vehicle, for example, now you're starting to see a lot of the agents and AI-based voice

assistants starting to come in. We have actually been talking about this in this event as well,

the DMW in their new vehicle coming out with Alexa Plus. When you look at the R&D side of things,

you see software development leveraging AI-based tools. We have a lot coming from AWS as well,

many of the automakers are using. I think a big theme across the auto industry has been

reducing the R&D cycle. It used to be eight to ten years when you come to a show like this,

you see a concept car and then it takes eight to ten years before it actually comes to life.

Now it's probably four to five years, but when you look at some of the vehicle makers coming

from China, now two to three years, so I think there's a lot of pressure to actually compress

that R&D cycle. So how are automakers using AI engine AI to accelerate their vehicle

development? Some specific examples are like virtualization of different vehicle functions,

like decoupling of the software and the hardware. So automakers can develop their software,

not necessarily linked to the hardware that could be in the vehicle. So that's a big part

of it as well. So I would say in the customer interaction, customer journey itself, I think

a lot of AI happening in the vehicle development, AV-ADAS functions, software defined vehicle,

how that software is developed, that acceleration matters a lot and the whole infotainment space

in vehicle. I think you're going to see a lot more agentic place coming in.

When you talk about the accelerated development timelines, you mentioned China, obviously a huge

sort of factor in all of that. Is the expectation that consumers will begin to expect faster

development timelines because of Chinese vehicles or that they're already expecting

faster development timelines because of consumer electronics or how does that expectation from

the industry kind of relate to what consumers expect? I don't think it has anything to do

with China, my personal opinion. I think it's about consumers' expectations around

the type of electronics equipments that they're using. I mean, if you think about your

relationship with your own phone, I mean, depending on your budget, you're tempted to

exchange it or change it every two to three years because the newer model that comes in,

maybe the model that comes out the next year, you're going to look at it and say, well,

not a lot has changed, not enough for me to change, but two to three years, I think it's

starting to be that cycle. And the other thing is vehicle technologies are changing so fast.

Like if you were to go into a vehicle that was taken to market like four years ago,

I mean, I wouldn't call it obsolete, but it's not going to look as shiny as some of the new

things coming up. So I think a lot is changing. And so it's essentially the consumer expectation

that you expect from anything that you're using. You would like to be taken something

like what's coming out new in the next maybe two to three year cycle is coming from that.

This is one area of software defined vehicles that I feel like has some tension because

I agree that the auto industry is looking at consumer electronics and consumer expectations

and the kind of consumer experience and saying, if we speed up development timelines,

you know, we can provide these leaps and bounds in terms of offerings, which you expect would

reduce the lifetime of the vehicle. In other words, that people would be purchasing vehicles

more quickly than right now, which is the average American fleet age of 12 years.

Then you also have offerings from the industry that anticipate additional capabilities and

functionalities being added to the vehicle, which from the consumer's perspective would make me think,

oh, that means that my vehicle like my phone would have software updates and therefore would not

need frequent replacement. So do you expect that software defined vehicles will extend

or shorten the vehicle lifetime? I think it will extend in my opinion. Definitely. I think

it's a good tension you point out there. And probably the expectation to get a new vehicle

is coming a little bit from the old paradigm. Because when you walked into the vehicle, not

everything was so very defined and things were looking a little bit obsolete. That's why you see

some of the designs evolving right now. You see these large screens, configurable screens in the

vehicle that gives opportunity to actually completely reconfigure what you see on that

big, large screen. I think software defined vehicle definitely will create opportunities to

extend the life cycle of the vehicle. But at the same time, keep refreshing the feature set that you

see in the vehicle. So you feel like and you think like and you are actually getting the best of the

vehicle functions and not necessarily have to change your vehicle. Absolutely.

You mentioned earlier also some of the in vehicle offerings, you know, cabin personalization,

ADAS and autonomy. And I've been really interested in the way that the industry has

solved some of the challenges of voice assistance. It was not that long ago that they were, frankly,

unusable. And now with with, well, you know, the industry was tapping large language models,

which developed a latency problem. And now is leveraging smaller language models on board

the vehicle. Can you talk a little bit about how you are thinking about the different pathways,

you know, edge computing versus cloud and sort of dividing the load across across those different

pathways? First of all, you mentioned how the user experience wasn't good until maybe like in the

last year or 18 months, I would say, that's definitely my observation as well. I think the

advancement we've seen on the large language models and now with the small language models,

like you said, has changed a lot. Again, like we're going to be talking about what you're doing with

BMW with the ix3 that's coming out with Alexa Plus. I think that's a completely different user

experience. Like it used to be command based. Now it's more contextual. Like for example,

you say I'm cold and then it's basically the car will turn on the temperature as opposed to you

set the temperature to 24 degrees, which is a bit more robotic. So I think that whole space

is changing. In terms of the hybrid computing model, I think that's definitely here to stay

because ultimately not everything can run on the cloud, but everything will be able to run on

in the vehicle. One of the things that we're seeing though is, and we're showcasing this in the

show this week, satellite connectivity, high bandwidth connectivity over time,

is also likely to change that paradigm over time. Like a lot of our customers are looking at

satellite connectivity, Amazon Leo in our case, to have connections in remote places.

But over time, I think it's going to give vehicle manufacturers the flexibility to

be able to do those tradeoffs, what's running on cloud and what's running on the vehicle,

because you will have a high bandwidth connection to a satellite at all times.

And it's going to give you that flexibility. A lot of the automakers we've been talking to,

as they think about their software defined vehicle roadmaps, they came to us and said,

in the long term, we have to have high bandwidth connectivity at all times. So we can do those

tradeoffs much faster and real time, almost like, I don't want to use a buzzword, but almost like

to your point on the computes, they want that compute to be as fluid as possible,

as opposed to predetermined in terms of what runs in the vehicle versus the cloud.

You can hear our own Molly Boygon's full conversation with AWS's

Asgur Tolumshu on the Automotive News Shift podcast, available wherever you get your podcast.

That's Daily Drive for today. I'm Kellen Walker. Thanks to Automotive News executive producer

Jake Nier as well as our own John Hutter for his reporting for today's podcast.

You can get the latest news on tech and innovation, Trump's Canada tariff threats,

and everything happening in the auto industry at AutoNews.com. Come back tomorrow for a

conversation with Jose Flores, CEO of Anchor, about why data management is the overlooked key

to the software defined vehicle era and why he says automakers must stop treating data as back

office compliance. If you don't manage the data properly from mental and you don't have

the traceability, the visibility, companies will keep bleeding profit, trust, and time.

We'd love to hear from you. Let us know what you think of the show and the topics we cover today.

Send us an email at dailydrive at autonews.com or leave us a voicemail at 313-444-2774.

And if you enjoyed the podcast, remember to like, leave a review, and subscribe so you never miss an episode.

Jan. 26, 2026 | Trump threatens Canada with 100% tariffs; AWS on AI timelines

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ADAS

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