Canadians Eye New Cars But US Tariffs May Price Them Out: Key Insights from KPMG
Recent research from KPMG Canada highlights a growing concern among Canadian consumers: while interest in purchasing new vehicles remains strong, the potential impact of US tariffs on new cars could significantly affect affordability and the broader auto market in Canada. Herald Gulf+1
According to the survey findings: Newswire
Consumer Intentions and Buying Outlook
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A substantial portion of Canadians (around 60%) plan to purchase a new car within the next five years, indicating strong market interest. Newswire
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Price and brand trust continue to be the top priorities for prospective buyers when choosing a new vehicle, with roughly 80% stating price influences their decision and 71% highlighting brand reputation. Newswire
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However, rising costs due to external trade policies are clouding these intentions, especially where tariffs may lead to higher sticker prices. Newswire
Impact of US Tariffs on New Car Prices
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Around 76% of Canadians are worried that ongoing trade tensions and tariffs could make new vehicles unaffordable. Newswire
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A significant 72% are concerned that prices will rise if Canada’s auto sector loses protections under the Canada–US–Mexico Agreement (CUSMA), especially with possible changes in trade policies. Newswire
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Nearly one-quarter of respondents feel that tariffs have already made new cars out of reach, and an additional estimated 10–15% price increase could push many others out of the market altogether. Newswire
This trend intersects with broader macroeconomic factors. For example, tariffs on automotive products have been a key element of the 2025 United States trade war with Canada, with duties imposed on cars and parts potentially disrupting traditional cost structures. Wikipedia
Shift Toward Domestic Vehicle Preferences
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The study shows that 72% of Canadians attach importance to vehicles being assembled or built in Canada, with nearly a quarter saying it is “very important” in their buying decision. Reddit
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This preference signals a strong consumer shift toward supporting domestic production and reducing dependency on cross-border imports.
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Additionally, non-American brands with a strong manufacturing footprint in Canada, such as Toyota and Honda, have gained increased trust among Canadian buyers because of their local operations and less exposure to tariff fluctuations. Global News
Economic and Strategic Implications
Consumers aren’t just focusing on affordability; they are also thinking about the implications for Canada’s automotive strategy:
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Many feel that the Canadian auto industry needs to adapt, possibly advocating for new national strategies to strengthen domestic manufacturing and supply chain resilience. Newswire
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There are calls for enhanced government support aimed at boosting local production, securing jobs, and focusing on future automotive technologies like electric vehicles (EVs). Newswire
These dynamics also tie into the current political and economic landscape. For instance, formal talks between Canada and the U.S. on reviewing free trade agreements are underway, which could influence future tariff structures and trade protections. Yahoo Finance
Broader Context: Tariffs and Market Stability
Tariffs are not just isolated fees; they affect broader market behavior:
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Increased tariff uncertainty can push Canadian consumers toward used cars as they seek more affordable options than new vehicles. Newswire
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Small businesses and manufacturers that depend on cross-border supply chains also face rising operational costs when tariffs are imposed on imported components and finished goods. For more about how tariffs affect business operations, read this comprehensive guide to tariffs and their economic impact. How Tariffs Can Impact Businesses (Nav.com)
Consumer Confidence and Market Resilience
Despite the concerns, Canadian interest in new cars underscores resilience in consumer confidence. However, market strategy adjustments—both governmental and industry-level—are crucial if the aspirations of Canadian car buyers are to be sustained amidst shifting trade policies.
For automotive market trends and deeper insights into how tariffs shape pricing, refer readers to Canada’s evolving automotive strategy on TriumphPost.