Canadian production was initially located there because of Candian tariffs prior to the 1965 Canada-US Auto Pact. Health care costs are certainly an advantage, however I believe low wages are the main factor towards manufacturing in Mexico and China.
In 1964, Canada had a roughly $600-million auto trade deficit with the United States. Canada was producing about 7 per cent of Canada/US auto output, but accounted for less than 1 per cent of US sales around this time.
The fundamental problem was that Canada’s auto industry was highly inefficient. The subsidiaries of US companies, operating in Canada behind a high tariff wall, assembled a wide range of different models in Canada at production levels insufficient to achieve the economies of scale needed for commercial success. They had been set up as branch plants not only for the Canadian market, but to take advantage of earlier trade preferences with the British Commonwealth, which had by then lost much of their value. There was no incentive to invest in Canada. Productivity was about 60–65 per cent of US levels, and industry wages were about 70 per cent of US levels. Meanwhile, Canadian consumers paid much higher prices for automobiles and had less choice than their American neighbours.
Fearful of a declining auto industry and worried about the trade deficit, the government of Prime Minister John Diefenbaker had in 1960 appointed Vincent Bladen, a University of Toronto economist, to study the industry. In his report, Bladen rejected free trade as a solution because, he argued, Canadian industry was unprepared and would be much diminished. He also rejected higher tariffs as counterproductive. Instead, Bladen proposed measures to increase Canadian content in auto products by allowing companies to import vehicles and parts duty-free, provided they met Canadian content requirements.
After intensive diplomatic negotiations through the summer and fall of 1964, the two countries reached a compromise agreement. The resulting Auto Pact was a managed trade agreement that limited which companies could benefit, and imposed ongoing conditions or safeguards to ensure growth of the industry in Canada. The Americans had sought a free trade agreement, but Canada wanted an agreement with safeguards. A pure free trade agreement, Canada argued, would lead to a much diminished auto industry in Canada since all the key investment and production decisions would be made in the United States.
https://www.thecanadianencyclopedia.ca/en/article/canada-us-automotive-products-agreement#:~:text=The%20Automotive%20Products%20Trade%20Agreement%20of%201965%2C%20better,auto%20industries%20in%20a%20shared%20North%20American%20market.
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