The Canadian Automobile Dealers Association (CADA) is sounding the alarm: the trade war the U.S. is waging against Canada could lead to a 25-percent drop in new vehicle sales in Canada by the end of 2025.
“In the best-case scenario, we'll remain in a flat market at around 1.85 million units. Before the implementation of the new tariffs, forecasts were rather pointing towards 1.95 million sales, a figure that is now obsolete. That was two weeks ago, before all this madness began.”
- Tim Reuss, President of CADA
Worrying scenarios for the market
According to Reuss, the worst-case scenario would see the market fall to 1.5 million units sold. That kind of drastic decline would plunge dealers, manufacturers and suppliers into an unprecedented crisis. "Everyone is trying to understand where we stand, from manufacturers to subcontractors," he emphasizes.
A double-edged tariff escalation
On April 3rd, the Trump administration imposed 25-percent tariffs on foreign vehicles that do fall under the current North American free trade agreement. Even compliant vehicles are now hit with a tax on their non-American components.
Canada immediately retaliated with countermeasures on American vehicles, while sparing parts destined for Canadian assembly lines. It’s a measured response, but one that hasn’t prevented tensions – and uncertainty - from rising.
Production on hold, jobs at stake
Reactions among manufacturers' reaction have already started. Stellantis announced a two-week suspension of production at its Windsor, Ontario plant, starting April 7th, affecting around 4,500 workers, not counting 1,500 worker at suppliers. Other shutdowns have also been confirmed at the Toluca site in Mexico, as well as in several parts plants in the U.S..
The continental industry under threat
CADA is but one of many industry watchers, stakeholders and analysts who are denouncing a destructive policy. Among the predicted consequences are increased prices, paralyzed supply chains, massive layoffs and a high risk of recession. Worse still, the instability threatens North American industrial cooperation built over decades.
Even though Canada has avoided the reciprocal tariffs announced last week against other countries, it is being penalized via taxes on steel and aluminum exported to the U.S., as well as the auto tariffs.
Uncertainty: Enemy Number One
"The real problem is uncertainty. Not just for our members, but especially for the market," Reuss laments. "Consumers worried about the future will postpone their purchase. And that's exactly what we want to avoid." Asked about his ability to cope with this economic storm, Reuss says, not without irony:
"I've learned in recent months to always date my statements."