U.S.-Built Vehicles Fall to 28.4% of Canadian Sales as Tariffs Reshape Supply

• U.S.-built vehicles accounted for 28.4%, down 7%, of Canadian sales during 2026’s first half.

• Mexico reached 22.2% of Canadian sales as automakers adjusted vehicle sourcing.

• U.S.-built sales fell sharply among automakers without Canadian vehicle assembly operations.

U.S.-built vehicles accounted for just over 28% of Canadian new-vehicle sales during the first half of 2026, as tariffs continued to redirect automakers’ sourcing for the Canadian market.

The figure is down seven percentage points from 35.4% during the same period in 2025, according to JD Power Canada data. U.S.-built vehicles had represented roughly 40% of Canadian sales from 2021 through the first quarter of 2025.

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The decline is the result of the 25% U.S. tariffs introduced on Canadian-built vehicles in April 2025 and Canada’s subsequent retaliatory duties on U.S.-made vehicles.

Automakers have responded, simply in short, by adjusting supply where alternative production is available. Subaru has moved all Canadian supply essentially away from U.S. production and toward Japan. Hyundai Canada has drawn more vehicles from Mexico and South Korea, while Mazda and Nissan have reduced Canadian availability of certain U.S.-built models.

These sourcing changes have helped Mexico increase its Canadian market share to 22.2% in the first six months of 2026. This is compared with 18.3% a year earlier and 13.7% five years ago. Mexico is winning.

Japan’s share climbed to 16.6% from 13.7%. South Korean production represented 15.6% of Canadian sales, one percentage point higher than during the first half of 2025. Europe’s share was largely unchanged.

Robert Karwel, director of OEM Solutions at JD Power Canada, said Mexico could challenge the United States as Canada’s largest vehicle source in 2027 if current tariff conditions remain.

Canadian-built vehicles did not gain share during the period. Their portion of new-vehicle sales declined to 11.5% from 12.6% a year earlier, with plant changeovers and lower production at some facilities among the factors cited by Karwel.

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Tariff exposure also varied sharply by automaker. Ford, GM, Honda, Stellantis and Toyota operate Canadian assembly plants and can benefit from Canada’s tariff-remission framework when qualifying production requirements are maintained.

U.S.-built vehicles represented 45.2% of Canadian sales for those five manufacturers, 3.1 percentage points below the previous year.

The change was much larger among automakers like Subaru and Kia, without Canadian assembly operations. U.S.-built products represented only 4.9% of their Canadian sales during the first half, compared with 17.7% a year earlier.

Source: Automotive News