‘U.S. trade policy is damaging the U.S. auto industry’: Canada’s purchase of American cars hits new low as Trump’s tariffs backfire on U.S. automakers

A decade ago, nearly half of new cars hitting Canadian roads were built in America, but after months of restrictive U.S. tariffs, the number of Big Three autos purchased from America’s northern neighbor have dropped precipitously.

Only 28.4% of new vehicle sales in Canada in the first half of 2026 were U.S.-built, down from 35.4% in the first half of 2025, according to JD Power Canada data. From about 2021 to 2025, the U.S. market share of new vehicles in Canada was roughly 40%.

Auto analysts blame the steep decline on a series of import taxes placed on Canada over the last year and a half, which included a 25% tariff on Canadian-made cars, a levy expected to double and apply to Canadian auto parts, steel, and vehicles on Jan. 1, 2027. Canada imposed countermeasures, including retaliatory tariffs on American-make autos, as well as on steel and aluminum. 

The U.S. auto industry relies heavily on Canada, which is the largest export market for American auto markets—larger than the next 10 markets combined, according to a Royal Bank of Canada (RBC) analysis published last month. Auto trade between the two countries has topped $100 billion this year, and despite the speed bumps in trade policy, Canada remains America’s largest auto market.

But recent trade policies are not only eroding this relationship, analysts warn, but increasing the likelihood the import taxes meant to punish Canada are actually having a larger adverse impact on American automakers.

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