U.S. tariffs on the auto sector would substantially raise the sticker price of cars, experts say

Abby Hughes · CBC News

· Posted: Apr 02, 2025 4:00 AM EDT | Last Updated: 10 minutes ago

If looming 25 per cent tariffs connected the car manufacture spell up connected April 3 arsenic antecedently announced by the U.S. government, experts accidental they'll person a immense interaction connected the terms of cars for Canadians.

U.S. President Donald Trump's medication announced past week that a 25 per cent taxation connected each fully-built vehicles imported into the U.S. would spell into effect connected April 3. The 25 per cent fig would besides widen to immoderate cardinal car parts, including engines, transmissions and electrical components, and the White House near the doorway unfastened to a levy connected much car parts down the road.

Colin Mang, an adjunct economics prof astatine McMaster University, says however the tariffs play retired successful the U.S. and however Canada reacts volition interaction however overmuch the terms of a car rises, but the dollar magnitude could summation anyplace from $1,000 to $8,000 Cdn.

"What we're going to spot is prices commencement to summation successful the United States and that's going to person spillover effects present successful Canada arsenic well, due to the fact that the prices volition way each other," Mang said.

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Retaliatory tariffs by Canada would lone adhd to the terms increase, according to Mang. While determination are astir a twelve oregon truthful car models that are assembled successful Canada that mightiness not beryllium arsenic impacted by tariffs, the interconnected proviso concatenation that sees car parts criss-cross North America galore times earlier they end up successful a conveyance volition beryllium affected.

Mang says Canada exports immoderate 1.1 cardinal cars to the U.S. each year, truthful tariffs connected the domestic auto manufacture could mean potential occupation losses.

He noted that these changes would also undo the decades of enactment done since the inception of the 1965 Auto Pact, which sought to physique a singular North American car manufacture that some countries would payment from.

Charles Bernard, pb economist with the Canadian Automobile Dealers Association, agrees that tariffs would beryllium rapidly followed by a terms hike. He says the existent proviso of cars connected the batch would cushion the terms summation ever truthful slightly, but arsenic soon arsenic those cars are sold, the sticker terms would spell up.

"It would beryllium a important magnitude of wealth successful a satellite wherever cars were already not cheap," Bernard said.

Those looking to non-North American carmakers volition besides beryllium retired of luck, helium says. Production for brands consumers mightiness subordinate with Korea oregon Japan inactive often takes spot successful North America, truthful they're apt to spot the aforesaid kinds of increases, according to Bernard.

South Korean automaker Hyundai has already warned its prices could summation if the 25 per cent tariff by the U.S. goes into effect.

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Tariff uncertainty already having an impact

Mang says that for anyone successful the marketplace for a caller car, trying to bargain a vehicle before tariffs and reciprocal measures travel successful would beryllium a astute choice. He says involvement rates are down arsenic well, giving prospective buyers different crushed to acquisition sooner alternatively than later.

But at dealerships, the anticipation of tariffs connected April 3 is already having an impact. Greg Carrasco, managing spouse astatine Direct Nissan successful Mississauga, says terms panic has been keeping car shoppers away. 

"There is simply a batch of uncertainty … successful the aerial and we spot it," Carrasco said. "We're sitting [in] a holding pattern."

He says helium and different dealers astir the Greater Toronto Area are utilizing debased involvement rates and offers of nary payments for the archetypal six months connected utilized cars successful an effort to attract buyers. He says these deals should person cars flying disconnected the lot, but instead, income person been rather moderate.

Carrasco says it's a scary clip to beryllium a car dealer, fixed there's not overmuch helium tin bash but bargain cars present and anticipation they tin upwind the storm. "We're conscionable keeping our fingers crossed that the economical gods are going to beryllium favourable to us," he said.

Mang agrees that uncertainty due to the fact that of tariffs is making an impact. He points to user confidence, which dropped drastically successful caller weeks. The Conference Board of Canada puts the fig astatine 52.6 points — down by 12 points for the period of February, which is the biggest alteration successful a twelvemonth and a half.

"People are really, truly worried," Mang said. "They're disquieted astir their jobs. They're disquieted the system is heading to a recession, and truthful they're not truly reasoning astir those large purchases similar a caller car."

Bernard says there's immoderate denotation the marketplace mightiness beryllium softening. He says February merchantability numbers amusement a flimsy dip (which tin beryllium partially explained by an expected diminution successful electrical vehicle sales arsenic incentives to bargain EVs successful Quebec ended last month) and notes that it looks similar cars are sitting connected tons longer. He says that origin connected apical of the commercialized warfare volition beryllium atrocious for dealerships.

WATCH | Why experts accidental Trump's car program 'defies logic': 

The champion happening people interested successful buying a car tin do is to wage a sojourn to their section dealership, which helium says are champion suited to explicate wherever outgo savings tin beryllium made with the tariff concern changing rapidly.  

"It mightiness not ever beryllium astir what is connected the net oregon what Trump is saying," Bernard said. "The nonstop connection, oregon the lone mode [you] can speech successful a mode with the … institution gathering that car is done the dealership. And I deliberation dealers volition beryllium good prepared."