Canada’s exports of automobiles tumbled in January to the lowest level in more than four years, marking the steepest decline since U.S. President Donald Trump took aim at Canada’s auto sector.
The value of passenger vehicle exports fell 33 per cent, or $1.3-billion in January, contributing to a larger-than-expected $3.6-billion trade deficit, according to Statistics Canada.
It was the fourth-largest monthly decline for vehicle exports on a percentage basis since the late 1980s, though the previous three larger drops all occurred during outright recessions, in 1991, 2009 and 2020.
There is some hope that January’s grim auto numbers were a one-off. Statscan blamed the decline on “prolonged seasonal production stoppages,” which it said were due to model changes, a point which economists seized on.
“The data adds to evidence of a weak start to 2026 for the Canadian economy, although the temporary impact of auto plants retooling suggests upside in the following months for real exports,” Katherine Judge, a senior economist with Canadian Imperial Bank of Commerce, wrote in a note to clients.
However, those changes were in part a response to pressure Mr. Trump has put on automakers to shift production to the U.S. Canadian-assembled vehicles that meet the United States-Mexico-Canada Agreement (USMCA) requirements are subject to a 25-per-cent tariff on the non-U.S. content in cars and light trucks.
Automakers have responded by cutting production at plants in Ontario, reducing shifts and laying off workers. Since January, 2025, Canadian auto exports have been more than cut in half.
Canada’s auto parts sector has fared better, since parts that comply with the USMCA can enter the U.S. duty-free. Indeed, parts exports in January were down just 2.5 per cent from a year earlier.
But assembled vehicles traditionally accounted for the bulk of Canada’s auto sector.
A decade ago, for every US$1 of auto parts Canada shipped to the U.S., it exported US$5 worth of vehicles, according to U.S. trade data. In January, that number fell to just US$1.35.
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