The imposition of a 25-per-cent tariff on U.S.-made vehicles by Canada has sent shockwaves throughout the auto industry, with analysts warning of potential price increases for new cars, used vehicles, and even non-tariffed cars. Consumers are bracing themselves for sticker price hikes as the tariff’s impact is expected to be felt across the market. Canada’s countertariff has been implemented in response to the U.S. President Donald Trump’s tariff on Canadian autos, a move that has sparked debate about the potential consequences for consumers and the industry as a whole. Key statistics suggest that up to 60 per cent of cars purchased in Canada each year are imported from the United States, making the 25-per-cent tariff a significant development.

1. The tariff will only be applied to the portion of U.S. content in a car that is compliant with the United States-Mexico-Canada trade agreement.
2. Non-USMCA compliant cars will face the full 25-per-cent tariff.
3. The auto sector will also be impacted by aluminum and steel tariffs, which the U.S. has implemented and the Canadian government has responded to with countertariffs.

According to Charles Bernard, lead economist with the Canadian Automobile Dealers Association, the amount of price increases remains unclear due to the numerous variables involved. Some brands may try to absorb the increased costs to prevent prices from rising to a point where they are now competing with luxury cars.

Mr. Bernard noted that certain popular car models have waiting lists, which will likely lead to price increases when buyers eventually complete their purchase.
The impact of the tariff on the used car market is also expected to be significant. Demand will likely shift to used cars and vehicles that aren’t subject to tariffs if they last long enough, leading to an uptick in used-car prices. Consumers are advised to take their specific questions to their local dealerships as they have the most information from the automakers on their pricing and manufacturing plans. Stellantis has already taken steps to limit or halt production altogether in response to the tariffs, highlighting the potential for supply-chain disruptions. Historical data suggests that the used car market will not see the same level of demand as during the pandemic.

“The reality is that the new cars that are being built in North America in the next days and weeks are going to be more expensive when they hit the market.” – Charles Bernard

The good news is that used car prices are not likely to face such a steep increase, according to Mr.