U.S. President-elect Donald Trump’s proposed 25% tariff on Canadian imports has sparked backlash, with industry experts warning of major disruptions to North America’s integrated auto sector. Trump justified the move by claiming, “we don’t need the cars.” However, industry data, labor leaders, and economists paint a different picture, emphasizing the vital role of Canadian-built vehicles in the U.S. market.
Currently, five automakers build vehicles in Ontario, including some of the most popular models sold in the United States. For instance, three of Ontario’s top-produced vehicles — the Toyota RAV4, Honda CR-V, and Lexus RX — are best-sellers here in the U.S. In addition, the Honda Civic from Ontario is America’s best-selling compact car, while the Chrysler Pacifica, built in Windsor, leads the minivan category.
Other notable Canadian-made vehicles include the Dodge Charger, Chrysler Voyager, Chevrolet Silverado pickup, and BrightDrop electric cargo vans. Many of these models rely exclusively on Canadian factories for production.
Experts warn
Sam Fiorani, Vice President of Global Vehicle Forecasting at AutoForecast Solutions, cautioned that U.S. automakers do not have the capacity to quickly replace production lost from Canada. He predicted that a 25% tariff would significantly increase vehicle prices, especially for high-demand models like the RAV4 and Civic.
Fiorani stated that although automakers might initially cover some tariff costs, U.S. consumers will eventually see price increases, potentially reaching up to $10,000 for certain fully equipped vehicles. Additionally, a report from Wolfe Research indicated that the tariff could raise the average price of new cars by $3,000, potentially leading to an annual decline of one million U.S. vehicle sales.
It is important to note that Canada’s auto industry is deeply interconnected with the U.S., highlighted by the fact that 80% of vehicles built in Ontario are exported to America. Meanwhile, Canadian factories are also key buyers of U.S.-made auto parts, supporting nearly 125,000 American jobs, according to Flavio Volpe, President of the Automotive Parts Manufacturers’ Association.
Unifor President Lana Payne, representing Canadian auto workers, highlighted the challenges of relocating production. “This sector depends on cross-border cooperation,” she said. “You can’t simply retool a U.S. factory overnight.”
Shifting production to the U.S. would require substantial investments and time, particularly for vehicles like the Chrysler Pacifica, Dodge Charger, and Chevrolet BrightDrop vans exclusively built in Canada.
“The automakers will absorb some costs in the short term,” Fiorani explained, “but a tariff of this magnitude will ultimately hit consumers’ wallets.”
