Fallout could be significant if these measures persist…

On March 4, after several weeks of negotiations, President Donald Trump announced the implementation of 25% tariffs on Canadian exports to the U.S., effectively immediately. The Trump Administration also announced 10% tariffs on energy exports (including critical minerals).

Retaliatory tariffs

In response, the Government of Canada announced 25% retaliatory tariffs on $155 billion worth of U.S. imports into Canada, with $30 billion impacted effective, March 4, with an additional $125 billion of U.S. goods scheduled to be impacted within 21 days. The Canadian government said that these counter tariffs will remain in place until the U.S. trade action is withdrawn. The Government of Canada also announced that is currently in discussions with the provinces and territories to pursue a range of non-tariff measures.

As far as the automotive sector is concerned, these tariffs will impact new vehicles, parts, and related products, including tires as well as tools and equipment. The full list of products impacted by these tariffs is available here – https://www.canada.ca/en/department-finance/news/2025/02/list-of-products-from-the-united-states-subject-to-25-per-cent-tariffs-effective-february-4-2025.html?R6wF9AvbqY=81A2EC638DF91F49021C490C67C06919

Far reaching

Additionally, for automotive OEMs, parts manufacturers, suppliers and businesses that service and repair vehicles, the impact of these tariffs could be far reaching. According to a report by TD Bank in January, in the first quarter of 2024, approximately $800 billion of goods crossed the Canada-U.S. border and the U.S. market is currently the destination of more than 75% of Canadian exports. 

Many vehicles manufactured in Canada by subsidies of U.S. companies or overseas automakers are exported to the United States, and components in the manufacturing of a vehicle can cross the border up to 8-9 times prior to final assembly. Peter Nagle, Automotive Economist with S&P Global Mobility, was quoted during an interview with CNN as saying that there is probably not a single vehicle on sale in the North American market that won’t be impacted by these tariffs. 

Single market

Currently, due to existing free-trade agreements, vehicles and components originating from Canada, the U.S. and Mexico are treated as being from a single market, and with these tariffs enacted, prices for new vehicles are set to soar, with some models and trim configurations likely discontinued to due to high cost and lack of availability.

Anderson Economic Group, a Michigan-based think tank, predicts that the average new vehicle price could climb between $3,500 and $12,000, making a huge impact on consumer pocketbooks that are already groaning under the weight of a cost-of-living crisis in both Canada and the U.S. 

Cutbacks in vehicle production could also see significant layoffs, and plants either closed or idled, which would not only directly impact vehicle manufacturing and sales, but other related sectors, given that auto manufacturing in North America represents a 9-1 job multiplier.

Significant layoffs in auto manufacturing and other industries will likely have a knock-on effect on communities across North America, including service businesses, such as auto repair shops, collision centres, tire retailers and others. 

Autosphere will bring more details regarding these tariff measures as information becomes available.