Experts Point to Backfiring Trade Policies in U.S. Auto Export Slump
U.S. President Donald Trump says Canadian tariffs are to blame for the drop in U.S. auto exports to Canada, but industry experts say there is more behind the decline, including Mr. Trump’s own trade war.
Mr. Trump on Monday said he will slap 50-per-cent tariffs on a range of Canadian imports in retaliation for Canada’s tariffs on U.S. cars, a widespread ban on U.S. alcohol and dairy market restrictions.
He said trade figures showed a year-over-year drop of 22 per cent in Canada’s import of U.S. cars for the 12 months ending in March of 2026, blaming Canada’s “scheme.” At the same time, Canadian imports from Japan, Mexico, South Korea and Germany have climbed by double digits.
But industry participants tell The Globe and Mail that the reasons for the decline in cars shipped to Canada include rising U.S. manufacturing costs owing to tariffs and a shift overseas to supply Canada – all results of the trade war ignited by Mr. Trump.
Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association, which speaks for Ford Motor Co. F-N
, General Motors GM-N and Stellantis NV STLA-N , said Mr. Trump’s tariff policies, which include 50-per-cent levies on imports of steel and aluminum from Canada, are driving up the cost of manufacturing in the U.S. and spurring those companies to supply Canada with an increased number of cars made in Mexico, South Korea or elsewhere, usually tariff-free.
Those same companies also make cars overseas and ship them to the U.S. and pay just 15 per cent in tariffs.
“This is protectionism in action,” Mr. Kingston said. “None of this should be a surprise to the U.S. administration. When you tariff your industries, companies will try and reduce their overall tariff burden, and the best way to do that now is to avoid U.S. manufacturing as a base, and service Canada from other jurisdictions where they have the ability to increase capacity.”
He also attributed some of the decline to Canada’s tariffs.
Canada began imposing the 25-per-cent tariffs in April, 2025, on U.S.-made cars, but spared the manufacturers that produce and invest in Canada. This remissions framework, itself a retaliation for Mr. Trump’s tariffs on autos, steel and aluminum, is designed to encourage manufacturing in Canada.
The Canadian tariffs apply to U.S.-made cars that do not comply with the U.S.-Mexico-Canada Agreement on free trade, and the non-Canadian and non-Mexican content of U.S.-made cars that are USMCA-compliant.
Andrew King, managing partner of DesRosiers Automotive Consultants Inc., said the import numbers cited by the White House reflect what he is seeing.
“The Canadian countertariffs have had a noticeable impact on vehicle sourcing – as they were designed to do,” Mr. King said. “A number of vehicle companies, especially from the group without duty remission programs, have switched sourcing of certain vehicles, if alternatives exist.”
Subaru has moved some U.S. production destined for Canada to Japan, while Tesla now supplies Canada with cars made in China and Germany instead of the U.S. Mazda and Nissan have stopped U.S. production of cars for the Canadian market.
These moves cost U.S. jobs and exports.
“Every manufacturer is doing it to some extent,” said Huw Williams, head of public affairs for the Canadian Automobile Dealers Association.
Mr. Williams said the U.S. overlooked the loss of U.S. jobs and investment when it launched the trade war on Canada, the biggest buyer of U.S.-made cars.
“They’re attacking their largest customer,” Mr. Williams said. “It’s not a particularly winning strategy, and you can see the results of that.”
Baris Akyurek, vice-president of insights and intelligence at AutoTrader, an online marketplace for new and used cars, said a survey of users showed some preference for buying an anything-but-American-made car.
These could include the Ontario-made Toyota Rav4 or Honda CR-V.
Canada has not revealed the production or investment numbers carmakers must maintain in Canada to be eligible for the tariff rebate. Nor has it said if any of the Detroit-based carmakers are paying tariffs when they import cars to Canada.
Ottawa last fall slashed the annual tariff-free import quotas of Stellantis by 50 per cent and GM by 24 per cent, citing “unacceptable decisions” to reduce manufacturing in Canada. GM closed its electric van plant in Ingersoll and reduced production at its Oshawa truck factory, while Stellantis moved planned production in Brampton to the U.S.
This article was first reported by The Globe and Mail
