Canadian consumers have, so far, escaped the widespread price hikes on new vehicles that’ve already hit American shoppers as a result of the U.S.-led trade war. But, experts warn that price increases are going to hit Canadian drivers too, and soon.
Robert Karwel, director of data and analytics at J.D. Power’s Canadian office, expects new vehicle prices will go up in June.
There’s a delay to the effect of tariffs on consumer-facing car prices. The Federal government announced a retaliatory tariff on U.S.-built vehicles in early April. That was roughly 50 days ago and companies typically have 60-70 days of inventory in stock, Karwel explained.
“We had to wait for the current stock of vehicles in inventory to sell-down, fresh inventory to be ordered and then those vehicles could see price hikes,” he said.
Late last week, Stellantis sent an email to hopeful customers with the subject line “Lease with pre-tariff pricing on existing inventory.” At the bottom it states the offers end June 2 and only apply to in-stock vehicles imported into Canada prior to the implementation of recent tariffs.
Other analysts agree; prices will rise. “While we have seen some steps away from a full-scale trade war in the auto sector, the prices for new vehicles are still expected to increase,” Andrew King, managing partner at DesRosiers Automotive Consultants, wrote in a recent e-mail to clients.
On its Canadian website, Tesla is advertising “pre-tariff priced inventory while supplies last.” Ordering a new Model Y Long Range AWD is about $20,000 more expensive than an identical Model Y currently sitting at a local dealership.
But, Tesla is the exception in Canada. Other automakers have yet to increase prices in this country. “We have not seen anything in the way of price changes yet,” Karwel confirmed.
Meanwhile, in the U.S., average car prices rose 2.5 per cent from March to April, according to Cox Automotive’s Kelley Blue Book. Ford and Subaru both increased prices by as much as US$2,000 on certain vehicles sold following the implementation of U.S. President Donald Trump’s 25-per-cent tariff on imported vehicles.
In Canada, prices have been trending lower so far in 2025.
According to J.D. Power, the average retail price for a new vehicle currently sits at between $48,000 and $49,000, which is below last year’s level of around $50,000.
Karwel chalks softening prices up to lower interest rates, which allow manufacturers to offer fairly aggressive incentives and discounts. Not only that, but shoppers are feeling the affordability crunch and increasingly choosing cheaper types of vehicles, thereby pushing the average price down.
“The mix has been slowly shifting toward smaller SUVs and slightly away from larger vehicles, which is one way consumers can manage their vehicle purchase budget,” Karwel said.
Unfortunately, those (relatively) low prices aren’t going to last as existing inventories run out and new imports from the U.S. face a tangled web of tariffs. As many as 60 per cent of new cars sold in Canada are imported from the U.S., according to the Automotive Parts Manufacturers’ Association. Price hikes could even hit European- or Asian-made cars if consumers flock to those vehicles in an attempt to avoid high prices on U.S.-built vehicles.
If there’s a silver lining here for Canadian car shoppers it’s that Karwel predicts price hikes won’t be as high as everyone originally thought.
“It will be much less than 25 per cent,” he said. Retaliatory tariffs only apply to a portion of those vehicles that comply with the Canada-United States-Mexico Agreement (CUSMA). In early May the federal government tweaked the tariffs, giving a break to car companies that manufacture in Canada. Price hikes could vary greatly from vehicle to vehicle and brand to brand, but Karwel suspects the added costs will be shared. “We expect the automakers to absorb some of it, with dealers and consumers absorbing the remainder,” he said.
We’ll find out in a matter of weeks, or perhaps days, exactly how much of the tariff hit consumers will have to absorb. If you want a new car, now is probably your last chance to buy one before prices increase.