OTTAWA, September 22 — The numbers land like a hard stop on a dealership lot: American-built cars have never sold this poorly in Canada. Canadian purchases of vehicles manufactured in the United States have fallen to their lowest level on record, a decline directly attributed to the 25% tariffs imposed by US President Donald Trump in March 2025. The tariffs, introduced under the justification of national security and aimed at reducing the US trade deficit, have driven up the cost of American-made cars for Canadian consumers.
DesRosiers Automotive Consultants puts the collapse in stark terms. US-built vehicles accounted for just 36% of Canadian new-car sales in the first quarter of 2025, down from 49% in the same period a year earlier — the lowest share since the firm began tracking such figures in 1996.
In raw volume, roughly 120,000 US-made vehicles were sold in Canada during Q1 2025, a 45% drop from the 218,000 units sold in Q1 2024.
A stable export market, destabilized
For US automakers, Canada has long been a reliable export destination. That reliability is now in question. The tariffs apply to a wide range of goods including automobiles and auto parts, and Ottawa answered with retaliatory measures of its own — a 25% tariff on US vehicles entering Canada, which has further dampened demand.
The shift has opened the door for competitors. Vehicles from Japan, South Korea and Europe are not subject to the same tariff barriers.
Toyota’s Canadian sales rose 12% in the first quarter of 2025 compared with the previous year; Honda’s climbed 9%. Canadian officials have criticized the tariffs as damaging to both economies and have vowed to keep pressing for their removal.
Beyond the auto sector
The vehicle decline is part of a broader pullback in US-Canada trade following the tariff imposition. In 2024, total US goods exports to Canada amounted to approximately $350 billion. Early 2025 data shows a 15% year-over-year decrease in automotive exports.
The United States-Mexico-Canada Agreement, which replaced NAFTA in 2020, was intended to facilitate trade and reduce barriers. The current tariffs have complicated those goals.
Concerns are mounting among US auto workers and manufacturers over a prolonged loss of market share in a key trading partner. What to watch next: whether the two governments return to the negotiating table, and whether the non-US automakers that gained ground in the first quarter hold it.
