Canada exports between 10 and 15% of its used vehicles to the U.S. annually. Our considerably weaker dollar has long made our used stock — especially the highly coveted luxury, SUV, and truck sector — very attractive.
But with the threat (or promise, depending on which side of the fence you’re on, I guess?) of tariffs coming from an unpredictable new administration, shockwaves would be sent through Canada’s auto industry. I spoke with Daniel Ross, senior manager at Canadian Black Book in charge of Industry Insights & Residual Value Strategy about those tariffs in a wide-ranging interview exploring what the coming year holds for Canadians from an automotive perspective.
American tariffs — Trump proposed 25% — would have a devastating impact on the Canadian auto industry at every level. Our supply chains are entwined with American ones, and parts used in the assembly of vehicles produced here often go back and forth across the border multiple times. To subject each of these transactions to tariffs would be crippling. Is there any glimpse of a silver lining for consumers?
“There’s a huge interest in our cars right now because we are sub 70 cents on the dollar,” says Ross. Proposed tariffs would wipe that out. “The luxury segment, the large SUVs, the trucks that the Americans want, that’s where we’ve seen high retained value. Is that artificially implanted by U.S. interest? Probably. If you removed it, that would be subject to some severe declines in the retained value.”
Every year, Canadian Black Book announces its best residual value awards. It gives consumers a peek at what that expensive shiny piece of machinery in their driveway will be worth in four years. With loan terms often stretching far beyond that, it’s valuable information. Proposed tariffs would throw a wrench into the works.
From a consumer perspective, this could be a dual-edged sword. You want a high retained value. If that “severely declines,” your car is worth less. But if a huge swath of our used inventory stays put, prices on used vehicles would be driven down. Depending on where you sit on the car buying/owner spectrum, this might be a window of relief for people who have been unable to find one since before the pandemic. It’s not enough to make tariffs a good thing, but if they happen anyway, it’s something to consider.
The erratic messaging coming from the U.S. has also tossed a chill through the electric vehicle part of the industry. “The tipping point for EV adoption is 10 per cent, and we’ve been over 12 all last year,” says Ross. We are definitely going EV, though he says the path will be a little longer. “Manufacturers have pushed launch schedules further out, like Ford’s three-row SUV has been pushed to likely 2027.” Quebec changed its Roulez vert EV program at the end of 2024, dropping the provincial subsidy from $7,000 to $4,000. That resulted in a huge rush in Q3 (and likely Q4, pending final sales numbers), and the Quebec government has suspended even that as of February 1 for 60 days, to build in some breathing room.
How does politics impact the auto industry?
Ross notes how politics deeply impacts the auto industry. A change in government makes the resumption of Quebec subsidies a toss-up. If a change at the federal level strips out those subsidies, does Quebec — by far the biggest adopter of EVs in Canada — raise their subsidy back up, or scrap it altogether?
“OEMs are huge machines that must move forward,” says Ross. “It’s a tough time to be a president of an OEM right now. Decisions are based on data, and we just don’t have the data.” The elephant in the room, of course, is that political decisions are increasingly not based on data. How is an industry that relies on it supposed to set its sails?
“This is the time for Canada to stake their claim as a global leader.” – Daniel Ross
The proposed merger between Honda and Nissan didn’t surprise Ross. He notes car manufacturers have long had consolidations and partnerships, and expects to see more like the Volkswagen alliance with Rivian. “The number one thing any OEM is looking to achieve now is cost-effective EV development,” says Ross.
He notes Honda has had previous partnerships — most notably in motorsports — fizzle out, but Nissan’s EV history, starting with the Leaf, could be a good match for Honda, an engineering powerhouse. Both need next-generation battery architecture and chemistry and they’re both talking about solid-state battery development. While Nissan, at first glance, gets the win checking the financial and reputational boxes from the merger, Ross says Honda would see benefits from Nissan’s history in the EV market, as well as acquiring vehicles for the body-on-frame segment, especially for the American market.
Lucid, a leader and frontrunner in EV tech recently revealed it’s in talks to partner with Aston Martin and potentially other OEMs. The overall theme when it comes to partnerships and consolidations, according to Ross is thus: “Every manufacturer knows they have to compete and this is how they’re going to do it or they’ll be dead in the water.”
With an industry holding its breath in some ways, Canadians also have to factor in the billions that have been pumped into EV battery manufacturing. Ross says Canada did the right thing. “We’ll be building here but supporting a global supply chain,” he explains. These were long-term moves to position Canada for the future, with plants serving multiple use purposes (cathode assembly, recycling, battery components) both for North America and globally. In Windsor, NextStar Energy, the Stellantis and LG Energy Solution EV battery venture, started production in October. “This is the time for Canada to stake their claim as a global leader,” says Ross.
China is building large quantities of high-quality EVs. Tariffs are intended to fend them off from coming here, but realistically, can that happen? “North America will eventually be susceptible to these cars,” says Ross. “In terms of what domestic manufacturers are doing overseas, their best days there are behind them…Chinese manufacturers are making good quality tech-laden cars that could very easily be sold over here.” Tariffs protect domestic manufacturers from an unfair advantage of the Chinese labour market (Unions? Human rights?), but Ross sees a future with Chinese cars built here, as well as Mexico. “If they talk to our political leaders and accept tariffs and make them equivalent in price, if we can address issues around things like security, why not bring them here and give consumers another avenue of choice?”
In Canada, 1.86 million vehicles were sold in 2024. The industry is healthy. Incentives are back, used car prices, interest rates and leasing rates are all coming down and affordability is improving. Tracking political noise — good or bad — is like reading ocean currents. If proposed tariffs are making you hesitate, consider those vehicles made here in Canada; here’s a great list.
And keep an eye on the used market.
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