The counter-tariffs imposed by Canada on vehicles assembled in the United States are likely to redraw the map of new-vehicle sales in the country. The direct response to the Trump administration’s 25-percent tariffs on imports of vehicles and parts opens a lane – if not an entire eight-lane highway - for makers of vehicles built outside the U.S.
The counter-tariffs
The Canadian government retaliated against the U.S. on April 9 with similar but targeted tariffs. Notably, the 25-percent levy only applies to vehicles not compliant with the Canada–USA–Mexico Agreement (CUSMA). For those that are compliant, only the portion of the vehicle containing non-Canadian and non-Mexican parts is surtaxed.
The counter-tariffs are on track to redefine the Canadian auto market, to the advantage of some and the disadvantage of others.
The big losers: Ford, GM and Stellantis
Especially vulnerable are the U.S. Big 3, among them Ford with its F-150, a Canadian market mainstay that has historically held the top sales spot. “Models built in the United States will see a marked decline,” says Sam Fiorani, VP of global forecasting at AutoForecast Solutions.
According to data from the Automotive News Research & Data Center, Ford imported only 181 vehicles from overseas out of a total of 278,398 sold in Canada in 2024. For Stellantis and GM, respectively 3.1 percent and 16.4 percent of sales came from imports from outside North America. All other imports came from the U.S.
The big winners: South Korean and Japanese automakers, Mexico and … Ontario
Conversely, Asian manufacturers such as Hyundai, Kia, Mazda, Mitsubishi and Subaru, which ship a majority of their vehicles directly from overseas, find themselves in an advantageous position. Thanks to free trade agreements between Canada, South Korea and Japan, their vehicles are not subject to import tariffs.
Hyundai and Genesis, for example, produced only 13.3 percent of their vehicles sold in Canada in North America in 2024. At Kia, that rate is 40.9 percent. Those figures suggest a rise in Canadian market share for those brands if they reorient some of their production outside of the U.S.
Vehicles produced in Mexico — such as the Nissan Kicks and the Chevrolet Equinox — are also winners, since they are exempt from Canadian tariffs. Fiorani notes that those models have always performed well in Canada and should do even better now that the country is distancing itself from the U.S.
Opportunities for Ontario
Obviously, models produced in Ontario, such as the Honda CR-V and Toyota RAV4, also benefit from the tariff climate. Despite the interconnectedness of their supply chains with the United States, the absence of Canadian levies on parts destined for Canadian factories gives them a head start.
The federal government also plans to implement a tariff remission framework aimed at rewarding Canadian manufacturers, although the precise terms have not yet been unveiled.
A measured but real impact on sales
According to Andrew King, managing partner at DesRosiers Automotive Consultants, around 41 percent of new vehicles sold in Canada in the first quarter of 2025 came from the U.S. He does not anticipate an immediate collapse of that percentage, given the time it takes an industry like the automotive one to make adjustments.
That said, a gradual decline is anticipated, particularly in segments where the supply of non-American models is abundant.
Daniel Ross of Canadian Black Book also expects a marginal decrease in the market share of U.S.-made vehicles. He points out that supply chains that include stops within the U.S. will be disadvantaged compared to vehicles produced entirely outside the country.
A Canadian automotive landscape in flux
These tariff policy changes not only mark a break in the 60-year history of North American automotive free trade. They point to a potentially radical realignment of the Canadian market, which could in the medium term favour increased brand diversity and resilience of local manufacturers, and apply pressure on American brands to either reorganize their logistics or lose market share in Canada.