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President Donald Trump recently stated that the U.S. doesn't need Canadian-built cars, emphasizing his preference for American-made vehicles. He made these comments during a virtual address at the World Economic Forum in Davos, Switzerland. Trump argued that Canada has been tough to deal with over the years and that the U.S. should focus on producing its own cars.
However, experts and reports suggest that this stance could have significant economic implications. The auto industry is highly integrated across North America, with car parts and finished goods frequently crossing borders. Imposing tariffs on Canadian-made autos could lead to higher costs for U.S. consumers and disrupt the industry.
Currently, Canada produces around 10% of cars sold in the U.S., with Mexico supplying close to 20%. The U.S. actually produces more cars for Canadian buyers than the other way around, with Canada’s trade administration estimating that 1.34 million U.S.-built cars were bought by Canadians in 2023.
To onshore the 10% of cars made in Canada to U.S. factories, as Trump would like, U.S. auto plants would need to add production of around 225,000 units to existing plants, meaning roughly six new plants would be required on U.S. soil. Conservative estimates for building a single auto factory in the U.S. would be in the billions, not including the variable costs of operating the factory itself once online.
The potential financial impact on consumers is also significant. Average U.S. retail car prices could rise by roughly $3,000, depending on retaliation by both trading partners, Canada and Mexico. In the event of strong counteractions, severe trade dislocations and significant economic consequences could occur, leading to collapsing demand in all three countries.
There are currently no Canadian mass-market automakers. There were years ago, including marques such as Bricklin, the McLaughlin Motor Car Company, and later McLaughlin-Buick. But the entities that do business in Canada are subsidiaries that report back to multinational corporations.
However, there are automakers that assemble certain vehicles in Canada. These operations support nearly 500,000 Canadian jobs, contribute $16 billion per year to our gross domestic product, put money in Canadian pockets, and are often sold here without ever having to leave the country and therefore aren’t subject to tariffs.
Some products have been shifted out of the Canadian automotive industry in recent years, while others have been put on hiatus or cancelled. There are some very popular nameplates that are still going strong, though.
Stay informed on which Canadian vehicles support our economy
Cars Made in Canada
Chevrolet Silverado
Chrysler Pacifica, Chrysler Grand Caravan
Dodge Charger
Honda Civic, Honda CR-V
Lexus RX
Toyota RAV4, Lexus NX
Campagna T-Rex
Vehicles No Longer Being Built in Canada
Chevrolet Equinox
Chrysler 300, Dodge Challenger
Ford Edge, Lincoln Nautilus
Ford GT
It's a complex issue with potential consequences for both countries.
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