U.S. Car Imports Share in Canada Declines Amid Tariff Pressures

According to the latest data from DesRosiers Automotive Consultants, the share of U.S. imported cars in Canadian automotive sales dropped to 39% from 41% in the first quarter, during the period from April to June 2025. Analysis indicates that bilateral tariffs between the U.S. and Canada have cooled trade relations between these long-time partners, and automakers have initiated contingency plans, leading to a decline in the share of U.S.-manufactured cars in the Canadian market during the second quarter. Andrew King, managing partner at DesRosiers, stated that while the decline in market share for U.S. cars in Canada is currently small, it may accelerate as car dealers clear out inventories accumulated before the tariffs and as automakers assess the economic viability of importing U.S.-assembled models to Canada, which are subject to a 25% retaliatory tariff. On April 9, the Canadian government imposed countervailing duties on U.S. imported vehicles. This followed a 25% import tariff imposed by U.S. President Trump on global vehicles, including those from Canada, on April 3. King noted that affected models are facing "significant impacts," with manufacturers of vehicles like the Mazda CX-50, Nissan Pathfinder, Murano, and Frontier taking measures to pause production of models intended for the Canadian market in U.S. factories while they await the direction of tariff policies. He stated, "The only other option for automakers is to raise prices, which is clearly not realistic for most segments and models with a 25% increase." King is optimistic about a trade agreement being reached between the U.S. and Canada in the third quarter, but if one is not achieved, he expects more automakers to reduce the number of U.S.-manufactured models in their Canadian product lines. In the second quarter, the impact of the countervailing duties was limited due to sufficient existing inventories and the "wait-and-see" attitude taken by most automakers regarding trade negotiations between the U.S. and Canada. Additionally, the Canadian government's tariff exemption framework for five automotive manufacturers producing vehicles locally played a crucial role. While details of this plan have not been made public, companies like Ford, General Motors, Honda, Stellantis, and Toyota will receive reduced import duties if they maintain production and investment in Canada. However, manufacturers like Hyundai, Kia, Mazda, and Nissan, which produce certain models in the U.S. without establishing assembly plants in Canada, are directly impacted by the tariffs on models imported from the U.S. This category of companies is a major reason for the decline in sales of U.S.-made vehicles in Canada, with their market share dropping from 9% to 7%. Over the past 20 years, the dominance of U.S.-made vehicles in the Canadian market has gradually weakened, and tariff policies have exacerbated this trend. Trade data from Innovation, Science and Economic Development Canada (ISED) shows that U.S.-made vehicles accounted for 48.9% of Canada's total automotive imports in 2024, down from 60.8% in 2014 and 66% in 2004. Brendan Sweeney, executive director of the Trillium Network for Advanced Manufacturing in Ontario, pointed out that 2024 marks a historic milestone where the share of U.S.-made cars in Canadian automotive imports falls below 50% for the first time. King noted that due to a decline in sales of U.S.-manufactured vehicles in Canada during the first quarter, Canadian-made cars gained a small share of the market, but vehicles assembled in other overseas markets are the biggest winners. Sweeney also mentioned that Mexico's rise is the biggest driver of the decline in U.S. made vehicles in Canada, with Mexico's share of imports to Canada increasing from 6.7% in 2004 to 16.7% in 2024, more than doubling. South Korea has also made significant progress, with its share of Canada's total imported vehicles rising from 5.8% in 2004 to 10.2% in 2024. Future trade negotiations between Canada and the U.S. could further impact the structure of Canadian automotive imports. The two countries are working to reach a trade agreement before an August 1 deadline, while Trump threatens Canada with a 35% tariff.