U.S. auto exports to Canada plummet on tariff tussle with Trump

Article content

Canada imported more vehicles from Mexico than the US in June for the first time in three decades, underscoring the historic shifts underway as the global auto industry grapples with President Donald Trump’s tariffs.

Canadian importers brought in C$1.08 billion of passenger vehicles from Mexico during the month, exceeding the C$950 million from the US, according to Statistics Canada figures. That’s the first time the Mexican auto sector has outsold the US in monthly data going back to the early 1990s.

Trump’s imposition of 25% tariffs on foreign vehicles has disrupted the long-standing system that mostly allowed the free flow of vehicles and parts across the three North American countries. For cars and trucks shipped under US-Mexico-Canada Agreement, the duty is applied only to the value of non-US content. But that small reprieve has done little to repair the strained relationship between the US and Canada.

In retaliation, Canada announced a tariff on US-assembled vehicles in a structure that largely mirrors the White House’s move. But the government also provides tariff relief for automakers that keep their manufacturing and investment in the country.

The shift in Canada’s imports is a potential barometer of how Trump’s tariffs will reshape the American industry, given that Canada is by far the biggest customer of US-made cars and light trucks.

The US ran an auto trade surplus with Canada in 2024 including the parts sector, according to data from the US Commerce Department. American exports of finished vehicles to Canada exceeded exports to Germany, Mexico and China combined.

Companies such as General Motors Co. and Ford Motor Co. generally serve the Canadian market with vehicles made in the US. Ford isn’t currently making anything at its lone Canadian assembly plant in Ontario, though it has promised it will start making F-Series Super Duty pickups there next year.

It’s possible that Mexico’s rise to No. 1 exporter of vehicles to Canada will be short-lived. Canadian imports of US autos were unusually high in February and March, averaging C$2.5 billion over those two months, as automakers raced to ship their products before any tariffs came in. That compares with monthly average last year of a little more than C$1.8 billion.

Major auto manufacturers have largely refrained from broad price increases to offset higher costs from tariffs. Instead, they’ve brought some production to the US, or shifted supply chains to sell made-in-America cars to US customers.

While the US has recently struck deals with major trading partners, including the European Union, Japan and South Korea, many of the finer details on the auto trade are yet to be codified.

It’s important the uncertainties are cleared up soon, said Erin Keating, an executive analyst with Cox Automotive Inc. American policymakers need to understand that the US attracts auto manufacturing investment in part because of its place in the larger North American supply chain involving Mexico and Canada, she said.

Still, there’s no sign that Trump will walk back his push to bring more manufacturing to the US, an indication that the reshaping of the global auto supply chain will last for years.

“What we’re seeing now is a begrudging acceptance that perhaps this is a new world and we are going be living with tariffs over the long term,” said Brian Kingston, chief executive officer of the Canadian Vehicle Manufacturers’ Association, who added that he’s hopeful a better deal can be reached.

“How do you then manage that? Is there a way to shift production to lower tariffs? Do you pass it on to the consumer? These are all open questions that companies are grappling with,” he said.