There’s nothing worse on an auto shopper’s anxiety levels or wallet than purchasing a new or a used vehicle outside of a planned cycle. Rushed purchases are much more likely to result in buyer’s regret. Depending on your risk comfort level, you might want to start reviewing automakers’ websites. But with Trump Tariffs looming over Canada, what should a car buyer do now?
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What Are Tariffs And Who Pays Them?
Tariffs are taxes on imports, paid by the importer and remitted to the government of the receiving country. So if a car plant in Ontario, shipped a $50K vehicle to the US under Trump’s proposed $25% tariff, the importer, not the Canadian government, pays $6,250 to Washington. Carmakers are going to find it difficult to shield their retail customers from the hike for long.
Tariffs Effect on New Car Prices in Canada
If Trump lands us with tariffs next month, we can expect Ottawa to follow through with our own tariffs on auto parts. While 25% on a $500 alternator for a $70,000 truck might not raise prices, it certainly would on a $10,000 transmission. And then there’s the issue of broken supply chains. Industry execs, such as Flavio Volpe of Canada’s Automotive Parts Manufacturers have forecast the end of automotive manufacturing in North America within a week of tariff implementation. So consumers might be shielded from sticker jumps for a month or so, but after that all bets are off and prices will rise. Don’t expect guaranteed relief from buying an offshore product because they may well adjust pricing to market demands. The hit on this side of the border isn’t likely to be as bad as south of it, where prices are expected to jump anywhere from $3,000 to $7,500. The main causes in Canada are likely to be how automakers report and pay tariffs on components and how long non-affected automakers hold off raising their prices. Expect ‘we’ve got the lowest tariff-ed rides on the block’ dealership ads to fill your screens soon.
Tariffs Effect on Used Car Prices in Canada
Disrupted new vehicle supply and price hikes will make used autos more valuable on the open market, so you’ll likely be paying more post-tariff than before. Although there is a flip side to it as well. About the only thing close to a bright spot under these dark skies, is that a Trump import tariff may slow down the flow of used Canadian vehicles into the US. But if our dollar slides any further as a result of a massive tariff wall, those US shoppers may return.
Should You Buy Before Tariffs Resume?
Seeing that we’re in the dead of winter with relatively less showroom traffic, dealerships and automakers alike are eager to move metal. If you’re close to retiring your current ride, you might need to move, and you may get an affordable deal. But also consider the long-reaching effects of a major tariff war between the US and Canada. Jobs will be shed, banks will foreclose mortgages, savings will be spent, and signing a 10-year term loan on a vehicle might be risky.
Impact of Tariffs on the Canadian Automotive Industry
Unless some angel government comes to the rescue of our automotive industry will major cash, the very interconnected system is likely to crash.
Overview of Trump’s Tariff Policies
Trump has been quoted saying that his tariff policy won’t affect US consumers and that foreign governments pick up the tab. Sorry, but history and tomes of legislation disagree. But, as always, nothing that comes out of his mouth when he’s got an audience, makes much sense or is to be believed.
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