Car buyers are in for a world of uncertainty with automotive tariffs possibly taking effect next week amid an ongoing trade war between the U.S. and Canada.
U.S. President Donald Trump has announced a 25 per cent tariff on all automobiles imported to the United States, including Canada. It is not yet known if Canada will respond with matching tariffs.
At least one expert believes car prices are likely to rise, based on several factors.
“You’ve got the trade war going on that is affecting the cost of steel and aluminum parts, and obviously, there is a lot of steel and aluminium that goes into automobiles, so that’s probably going to increase the price of a car from $1,000 to $1,500,” said Fraser Johnson, an auto supply chain expert at Western University.
Johnson said the biggest issue in the short term is how car companies will adjust their prices if the price of American automobiles increases. He added it’s hard to buy Canadian for vehicles, as parts come from multiple countries and are assembled in different places.
“Products that are assembled in Oshawa or Windsor could have parts in them from Mexico, from the U.S., and also overseas,” he said.
“There’s over 2,000 parts that go into an automobile. So, it’s not just the product and the parts that are shipped to the auto assembly plants, but also the subcomponents that are bought by the suppliers.”
Johnson said people looking for a car should consider potentially buying used and also consider a company’s inventory before making a decision.
“Car companies usually hold anywhere between 60 days and 70 days worth of inventory in their supply chain,” he said. “So if you’re worried about something happening on April 2, I wouldn’t really worry about that, because there’s going to be at least a two-month or three-month period of adjustment, but I would start looking soon.”
You can watch the full interview in the space above.
-With files from CTV’s Maralee Caruso
