Canadian New-Vehicle Prices May Rise $6,000 Amid Tariff Threat, Pushing Buyers to Used Market

• J.D. Power projects $6,000 price hikes on new vehicles under proposed U.S.-Canada tariffs.

• Surveys show nearly half of Canadian buyers would rethink purchases if tariffs take hold.

• Used-car market already sees rising demand and prices as tariffs drive consumers from new market.

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The United States’s proposed tariffs are expected to raise new-vehicle prices in Canada by as much as $6,000 (some say as much as $12,000). This could prompt a shift in consumer behaviour regarding the used-car market.

Robert Karwel, director of customer success at J.D. Power Canada, said the combined effect of a 25% U.S. tariff on Canadian vehicles and reciprocal Canadian measures could lift average new-vehicle transaction prices from $49,000 to $55,000 in 2025. Karwel estimates that consumers will absorb roughly half of the additional cost, with automakers and supply chain actors taking on the remainder.

Vehicles assembled in North America, particularly those built in Canada with U.S.-sourced parts, are expected to be more heavily affected by tariff-related cost increases than models imported from overseas. Karwel said automakers are expected to maintain model price hierarchies despite the variable impact on manufacturing, likely resulting in broad price increases across vehicle lineups.

Karwel added that automakers are anticipated to reduce purchase incentives rather than raise sticker prices directly as a less visible method of cost recovery.

Consumer data indicates a potential slowdown in new vehicle deliveries created by consumers modifying their new car pans. A February 2025 survey by AutoTrader found that 47 % of Canadians planning to buy a vehicle would alter their decision in response to tariffs. Of those, 30 % said they would opt for a used vehicle instead of a new one, while 36 % reported they would reduce their overall budget.

Inventories and Used-Vehicle Market Begin to Adjust

Canadian dealers and automakers are taking steps to mitigate potential impacts. Some franchised dealerships have built up new-vehicle inventory, while manufacturers have been stockpiling units near the Canada-U.S. border. Daniel Ross of Canadian Black Book said automakers have even acquired facilities near the border to expedite logistics during trade disruptions.

Despite these efforts, industry experts expect a delayed but eventual tightening of new-vehicle inventories should tariffs remain in effect. AutoTrader vice-president Baris Akyurek said production planning adjustments will only occur if tariffs persist beyond three months. In the meantime, new car prices are expected to rise regardless of supply levels.

The used vehicle market is already experiencing a surge in demand. Prices are rising in anticipation of higher new-vehicle costs, and some consumers are accelerating purchases to avoid future tariffs. Akyurek likened the trend to the post-pandemic period, when microchip shortages led to spikes in used-vehicle values.

Export activity from Canadian used inventory is also expected to decline, according to Automotive News. U.S. buyers account for approximately 15 % of used-car exports from Canada, down from 20 % during the pandemic’s peak. Ross said tariffs will dampen cross-border demand but not eliminate it entirely due to the relatively weak Canadian dollar.

Tariffs Catch Individual Buyers Off-Guard

Beyond the broader market implications, individual consumers are also being impacted. Pat Fletcher, a 77-year-old car enthusiast from Winnipeg, faced a $46,636 bill after attempting to import a 1968 Dodge Charger RT he purchased in Texas for US$98,000. Border officials told Fletcher that the vehicle was subject to a 25 % surtax under Canada’s tariff rules.

Fletcher, as reported by CTV, said he researched applicable tariffs before purchasing but found no mention of vintage vehicles. The Canada Border Services Agency (BBSA) later confirmed that under the Customs Tariff Act, older vehicles, such as the 1968 model, are covered by a customs notice that includes items manufactured more than 25 years ago.

Fletcher could not pay the fees, so he was issued a goods refusal notice and forced to leave the car in North Dakota. The vehicle remains in storage while he awaits potential changes to tariff regulations. We’d have a hard time sleeping at night knowing our dream car had to be left behind, not knowing if we’ll ever see it again…