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Understanding the Tariff Landscape
In a move that could reshape the automotive market, U.S. President Donald Trump has announced plans to impose significant tariffs on steel and aluminum imports, including those from Canada. This decision has sent ripples through the Canadian automotive industry, prompting experts to advise consumers to rethink their vehicle purchasing timelines.
Baris Akyurek, vice-president of insights at AutoTrader, emphasizes the urgency: “If you’re going to buy a car sometime in 2025, it would probably be good to speed it up. One hundred per cent.” With tariffs set to take effect on March 12, the clock is ticking for potential buyers.
The Ripple Effect on Vehicle Prices
The implications of these tariffs are profound. According to Erik Johnson, a senior economist at BMO Capital Markets, the cost of new vehicles could rise by as much as $700, with estimates potentially reaching $1,000 if domestic U.S.
producers also increase their prices. This is particularly concerning for Canadians, as the automotive supply chain heavily relies on steel and aluminum, which are integral to vehicle manufacturing. The average vehicle’s internal parts and body often cross the Canada-U.S.
border multiple times, making the Canadian automotive sector especially vulnerable to these new tariffs.
Market Trends and Consumer Behavior
Despite the looming tariffs, the Canadian automotive market has shown signs of recovery from pandemic-related disruptions. Akyurek notes that average prices for new vehicles have decreased by 2.9% year-over-year, while the used vehicle market has seen an even steeper decline.
However, the threat of tariffs could reverse this trend, pushing consumers towards the used car market as new vehicle prices soar. With inventories returning to pre-pandemic levels, there is a silver lining: many vehicles currently on lots won’t be affected by the impending tariffs, providing a buffer for consumers in the short term.
Strategizing Your Purchase
For those considering a vehicle purchase, timing is everything. Experts suggest that consumers should act quickly, especially if they are eyeing models that require longer lead times for assembly. Akyurek advises that anyone planning to buy a car in 2025 should accelerate their timeline to avoid potential price hikes. While there is still some leeway for negotiations between Canadian officials and the U.S. government, the uncertainty surrounding the tariffs makes it prudent for consumers to prepare for possible increases in vehicle costs.
Conclusion: The Road Ahead
As the situation develops, Canadian consumers must stay informed and proactive. The automotive market is at a crossroads, and the decisions made in the coming weeks could have lasting effects on vehicle prices. Whether you’re in the market for a new or used car, understanding the implications of these tariffs is crucial. With expert insights and market trends in mind, buyers can navigate this complex landscape and make informed decisions that align with their needs and budgets.
