Expert Opinions and Market Predictions
Industry Analyst Perspectives
"About a 1.5 million to 2 million unit annual reduction in sales in the U.S. for each year the tariffs are in effect."
— Sam Abuelsamid, Vice President of Market Research at Telemetry Insights
"If these tariffs stay in place for longer than six months, we estimate on average a $4,000 to $5,000 increase in car prices."
— Dan Ives, Global Head of Technology Research and Managing Director at Wedbush Securities
"You just can't relocate automotive production and the supply chain overnight."
— John Bozzella, CEO of Alliance for Automotive Innovation
S&P Global Mobility Scenarios
Probability of "an extended disruption" lasting 16-20 weeks
Probability of a "more dire scenario" where tariffs become permanent
Probability for a "quick resolution" with tariffs disappearing in a month or less
Economic Forecasts
TD Economics Projections
- Even 10% tariffs could lead to a sales decline of light vehicles in Canada of around 8%
- A 25% tariff could push the decline to around 13%
- Expects that the tariffs will be used as a negotiating tactic and may be reduced after initial implementation
BMO Capital Markets
- Expects that the 25% duties will remain in effect for one year
- Predicts the economy will contract for two quarters
- Forecasts lowering GDP growth for 2025 by 1.5 percentage points to 0.5%
J.D. Power Estimates
Potential price increase for a new vehicle due to 25% U.S. tariffs and counter-tariffs
This represents a 9.2% increase given that the average new vehicle in Canada costs $64,600
"Tariffs would increase vehicle prices by up to $12,000, which is too big a bite to bear in the pocketbook."
— Jeff Schott, Senior Fellow at the Peterson Institute for International Economics
Canadian Market Expert Views
"The first economic effect we'll see, and it's a major one, is on car prices. And our car prices aren't necessarily cheap right now at the moment, so it won't help something that was already a problem."
— Charles Bernard, Lead Economist at Canadian Automobile Dealers Association
"We were so close to normalcy. Everything was coming down, the demand was there, the supply was there, we were really close to normalcy and then this stuff happened."
— Baris Akyurek, Vice-President of Insights and Intelligence at AutoTrader
"The tariffs could curtail a lot of demand and bring down prices in the Canadian market."
— Daniel Ross, Canadian Black Book
Mitigation Strategies
Experts have identified several potential strategies to mitigate the impact of tariffs:
- Some Canadian dealerships are building up inventory now to provide a cushion against price increases
- Industry leaders are urging the Trump administration to reconsider the tariffs and seek alternative solutions
- Companies are lobbying the Trump administration to continue allowing parts and vehicles that meet USMCA regulations to remain tariff-free
- Potential development of alternative export markets beyond the US
- Increased focus on domestic sales and marketing to offset reduced export opportunities
Consensus Views Across Experts
Price Increases
Nearly all experts agree that vehicle prices will increase, with estimates ranging from 5-10% to specific dollar amounts of $4,000-$12,000 depending on the vehicle.
Timeline Uncertainty
Most experts see a 50% chance that tariff disruptions could last for months, though some believe Trump may use tariffs as a short-term negotiating tactic.
Supply Chain Vulnerability
The integrated nature of the North American auto supply chain makes it particularly vulnerable to tariffs, with components crossing borders multiple times.
Economic Downturn
Most economists predict the tariffs will contribute to economic contraction if maintained for more than a few months.
Used Car Market Impact
The used car market, which had been normalizing with a 12.1% price decline in 2024, is showing early signs of price increases as the market anticipates tariff impacts.