Tariffs 2.0: How Trump’s Latest Trade War Just Made Canadian Automotive Dream Even More Expensive? For updates, jump here
In the latest episode of ‘How to Ruin an Economy,’ Trump slaps a 25% tariff on Canadian auto imports, proving once again that bad decisions know no borders. The impending result? A financial pile-up for Canadian car buyers, importers, and auto workers, while the U.S. pats itself on the back for a policy that’s about as well thought out as a street race in a minivan (Reuters ), because nothing says 'strong leadership' like breaking your own supply chain.
And if you needed proof that even the U.S. doesn’t fully believe in its own tariffs, look no further than their quiet walk-back on Canadian energy. While cars and auto parts get slapped with 25% duties, the tariff on Canadian oil mysteriously dropped from 25% to 10%—because, surprise, surprise, the U.S. actually needs our oil to keep its economy running (Bloomberg). So, what’s the message here? Cars are a threat, but oil gets a free pass? Makes about as much sense as using a Lancer Evo as a drift car*.
*And don't gimme that nonsense about Tokyo Drift. We know better.
Ottawa isn't backing down either, and this time, they're making it personal. According to Brian Tyler Cohen, Melanie Joly (our foreign minister) has outlined that any counter-tariffs placed on America are specifically going to target red-state businesses - targeting Trump's political base specifically. British Columbia has directed all Canadian crown corporations to halt purchases from the US and by Canadian goods first and foremost.
Canada also announced that it will no longer buy any liquor produced in red state specifically as well as taking those alcohols off their shelves, and directing. So, as this relates to automotive news, I guess idiots who're going to drink and drive, forget your Wild Turkey or Jack Daniels, and stick with Crown Royal? * ¯\_(ツ)_/¯
*Seriously though, do NOT drink and drive. It's illegal, and you're being an ****** putting your life and the lives of others at risk
Prime Minister Trudeau has responded with retaliatory 25% tariffs on U.S.-made SUVs, trucks, and auto components, meaning that if you were eyeing a new F-150, Silverado, or Ram, be prepared to pay more—possibly thousands more (Bloomberg). This isn’t just a battle between governments—it’s a direct hit to anyone in Canada looking to buy, sell, or import a vehicle. Hope you didn’t get too attached to the idea of buying a reasonably priced truck.
We had some of our predictions proven true in our previous article, but now with the tariffs being implemented, we can see the true horror unfolding.
New Car Prices: Buckle Up for Sticker Shock
First up, if you were planning to buy a new car anytime soon, you might want to reconsider—or at least start selling plasma to afford it. The U.S. just slapped a 25% tariff on cars and auto parts imported from Canada and Mexico. That’s a huge problem because guess where a lot of North American cars are built? Yep, Canada and Mexico (Car and Driver).
Let’s take an example: the Toyota RAV4, built in Ontario and one of Canada’s best-selling vehicles. With the new U.S. tariffs on Canadian auto production, prices for Canadian buyers could increase by C$3,000 to C$5,000 per vehicle. This is because Canadian automakers rely on exporting a huge portion of their production to the U.S., and when tariffs make those exports more expensive, they spread the cost across all markets, including Canada. In simpler terms, if Toyota has to pay more to sell the RAV4 in the U.S., they’re not just eating that loss—they’re passing it down to Canadian buyers too. And it’s not just Toyota—Ford, GM, and Honda, all with manufacturing plants in Canada, will see their models become more expensive due to rising production costs.
In simpler terms, if Toyota has to pay more to sell the RAV4 in the U.S., they’re not just eating that loss—they’re passing it down to Canadian buyers too.
Meanwhile, for Canadians eyeing U.S.-built vehicles like the Jeep Grand Cherokee or Ford F-150, Canada’s retaliatory tariffs on American SUVs and trucks will drive prices up even further. That means higher costs for anyone in Canada looking to buy a full-size truck or SUV. So if you were hoping for a good year-end clearance sale, you might be in for a rude awakening.
Used Car Market: The Great Migration Begins
When new car prices go up, the used car market follows. Fewer people will be able to afford new cars, shifting demand toward used vehicles, driving up their prices. That 2015 Subaru WRX you were hoping to pick up for C$25K? Expect it to hit C$30K+ soon (WSJ).
Some industry analysts predict a 10-15% increase in used car prices as demand skyrockets. If this sounds familiar, it’s because we’ve seen it before—remember when pandemic shortages turned five-year-old Corollas into collector’s items? Here we go again, but this time, it’s a government-sanctioned disaster.
Canadian Auto Industry: Jobs on the Line
One of the biggest concerns? Canadian auto manufacturing jobs. With U.S. automakers facing higher costs to source parts from Canada, there’s a real risk of reduced production, layoffs, or plant closures (AP News). Automakers like Ford, Stellantis, and GM, which all have major operations in Ontario, could be forced to cut back production or shift operations elsewhere. The full impact remains to be seen, but for auto workers, this trade war could mean uncertainty and job losses. Because nothing says “winning a trade war” like putting thousands of people out of work.
Gas Prices: Here Comes the Pain at the Pump
The U.S. tariffs don’t just affect cars—they also hit crude oil exports from Canada. And while this will drive up American gas prices by at least 10% overnight, Canadians won’t be immune to the ripple effect (Yahoo Finance). If refinery disruptions occur, localized price spikes in Canada are possible—so don’t be shocked if your fuel bill creeps up, too. Maybe it’s time to finally buy that bicycle you’ve been thinking about.
JDM Imports: The Indirect Sucker Punch?
Think Japanese imports are safe? Think again. While Japan isn’t directly involved in this tariff battle, the effects will still hit JDM imports. Higher fuel and shipping costs will make it more expensive to bring in everything from Nissan Skylines to Honda Odysseys. The average cost of shipping a car from Japan to Vancouver, which used to be C$2,500 2 years ago, could jump to C$3,500 to C$4,000 per car—just in freight costs alone. And that is not counting the C$3500 to get it from BC to Ontario. And with auto parts from the U.S. facing higher duties, keeping an imported JDM car running might get even pricier. Hope you weren’t too attached to both kidneys, because that Skyline isn’t paying for itself.
Add in the increasing costs of replacement parts (many of which are sourced through the U.S.), and you’re paying significantly more to keep your imported Skyline or RX-7 running. This is where you need to either scale back your ambitions on unique models and consider ones (like a Prius or a Accord) which have similar parts in their North American cousins. Still subject to potential the tariffs, but at least you're not importing them from Japan as well!
So, What Now?
If you’re in the market for anything with four wheels, here’s what to expect:
New cars? Prices are going up across the board.
Used cars? Get ready for higher demand and inflated prices.
Gas? While the U.S. will feel it worse, Canadians could see localized price hikes.
Auto industry jobs? Potential layoffs and instability loom over Canadian plants.
JDM imports? More expensive to ship, more costly to maintain potentially
UPDATES: March 3rd. The Tariffs are here!.... sorta?
Trump’s back at it again with the tariffs, because nothing screams "economic strategy" like making cars more expensive for literally everyone. On March 4, 2025, he officially slapped a 25% tariff on all imports from Canada and Mexico, with a 10% tariff on Canadian energy products—because apparently, cutting off your own supply chain is the new wave in global trade policy. (AP News) Well... sorta. Because 24 hours later, he announced a temporary reversal (NYTimes) till April 2nd. This was possibly due the pressure from the big 3 auto makers or lobbyists or maybe because Trump saw Jesus in his chicken nuggets and repented. Who knows?
How This Wrecks the U.S. and Canadian Auto Markets
If you thought car prices were bad before, just wait—this is about to be another supply chain disaster, but this time on purpose. The North American auto industry runs on a complex web of cross-border parts and manufacturing, meaning this tariff hike will jack up production costs by an estimated C$3,000 to C$10,000 per vehicle. That’s great news if you’re a dealership looking to sell fewer cars, or a consumer who enjoys paying more for the same product. Automakers like Ford and GM have already raised the alarm, warning that this move could disrupt manufacturing and hit consumers with higher prices across the board. (WSJ)
Will JDM Imports Become Canada’s Tariff Loophole?
With North American cars about to get even pricier, JDM imports might be the last affordable option for Canadian buyers. I find it an almost sad irony that dragging a 15 year old car across the Pacific Ocean (soon to be renamed the 'Ocean of America' or some garbage) and then across continental North America, is cheaper than buying domestic at this point in time.
Since Canada still allows 15-year-old imports, enthusiasts and budget-conscious drivers could turn to Skylines, Crowns, and even JDM Priuses to dodge the tariffs. The downside? Parts availability, insurance headaches, and maintenance quirks could make it a tougher sell for the average driver unless your buying models (like the Prius) that have American-equivalents to their Japanese cousins. That said, if you were already considering a right-hand-drive import, now might be the time to pull the trigger before demand spikes. (Barron's)
Bottom line? Car prices are rising, tariffs are making everything worse, and JDM imports might just be the best workaround for Canadian buyers. Buckle up—it’s going to be a wild ride.
What Can You Do?
Buy now before the price hikes kick in. If you’re thinking of upgrading, don’t wait.
Consider used while prices are still reasonable. If the new market gets too expensive, a lightly used vehicle might be the next best bet.
Brace for gas price fluctuations. If you weren’t considering a hybrid before, maybe now’s the time.
Support local auto workers. These tariffs could put thousands of Canadian jobs at risk.
The best thing you can do right now? Act fast. If you’ve been eyeing a JDM import, don’t wait for prices to catch up with the tariffs. If you’re buying a used car, buy before the market adjusts. And if you’re buying new? Hope the dealer hasn’t updated their sticker prices yet.
Has this trade war changed your purchase plans? Do you have any four-letter-words to describe this situation (please exercise your Canadian politeness here)? Let us know in the comments below!
~ DREAM
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