Potential Impact Analysis

Short-term Impact (1-3 months after April 2nd)

3-7%

Likely immediate price drops as export demand suddenly disappears

In the immediate aftermath of the April 2nd tariff implementation, we expect:

As the market adjusts to the new tariff reality, we expect price segmentation based on vehicle type and age:

Newer used vehicles (1-3 years old)

Potential price stability or modest increases due to supply constraints

Older used vehicles (4+ years)

Continued downward pressure on prices

Luxury and high-end vehicles

Larger price decreases (potentially 10-15%) as these were more commonly exported to the US

Other medium-term effects may include:

Dealers adjusting their inventory acquisition strategies
Increased competition among Canadian dealers as they compete for a more limited market
Potential consolidation in the dealer market as margins are squeezed
Development of new marketing strategies to stimulate domestic demand

If tariffs remain in place for an extended period, long-term adjustments will include:

Market adjustment to new trade patterns
Potential development of alternative export markets
Gradual price stabilization as supply and demand reach new equilibrium
If tariffs are reduced through negotiations (as TD forecasts), potential price recovery

"If the tariffs persist for any length of time, I expect it to lead to a recession within a year and an increase in unemployment."

— Sam Abuelsamid, Vice President of Market Research at Telemetry Insights

The impact of tariffs will not be uniform across Canada:

Border Regions

Likely to see the most significant price impacts due to higher reliance on cross-border trade

Ontario

As Canada's automotive manufacturing hub (28.9% of Ontario's exports are auto-related), this province may experience more pronounced effects

Urban Markets

May see larger price drops due to higher inventory levels and more competitive dealer networks

Rural Areas

May experience delayed or muted price effects due to less competitive markets

Potential buying opportunity: Canadian consumers may benefit from lower used car prices in the short to medium term
Higher ownership costs: Increased parts and maintenance costs could offset some of the purchase price savings
Financing challenges: Despite Bank of Canada interest rate cuts, used car loan rates remain high
Vehicle selection changes: The mix of available used vehicles may shift as dealers adjust their inventory strategies

Inventory management challenges: Dealers may face oversupply issues and increased carrying costs
Margin pressure: Lower selling prices combined with stable acquisition costs could squeeze dealer margins
Business model adjustments: Greater focus on service, parts, and F&I products to maintain profitability
Market consolidation: Smaller dealers with less financial flexibility may struggle to adapt