Car prices in Canada are rising due to tariffs

Car prices in North America are expected to rise due to new tariffs from the United States. Analysts say there is a 50% chance that this tariff disruption could last for several months, leading to slower production of some vehicles. Experts like Charles Bernard from the Canadian Automobile Dealers Association warn that this will not help the already high costs of vehicles. The average price of a new car in Canada has gone up 43% from 2019 to 2025, while used car prices rose 39.5% during the same period. Though used car prices decreased by 12.1% in 2024, new tariffs could push prices up again. J.D. Power estimates that a 25% tariff could increase the cost of a new vehicle by about $6,000. The average cost of a new vehicle in Canada is currently around $64,600. However, this is just an estimate, and many factors could influence the actual price increase. Tariffs on Canadian goods, steel, and aluminum were recently enacted, with additional tariffs planned for autos. Analysts predict that these tariffs could lead to reduced production and increased costs for consumers. A potential long-term trade structure could further increase prices and weaken vehicle sales. The impact of tariffs could also result in inflation or even a recession. This would lead to higher unemployment and less spending power for consumers. Some experts warn that light vehicle sales could drop significantly due to the rising costs. There are signs that were previously good for the auto industry, such as decreasing prices, are now stalling. Used car prices showed signs of slight increases in March, even though rates had been declining. Dealerships are stockpiling vehicles to protect against future price hikes due to tariffs. Industry leaders indicate that rising vehicle prices seem inevitable at this point.