Canada · Japan · Donald Trump · U.S. · Fortune Technology
‘U.S. trade policy is damaging the U.S. auto industry’
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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.
Key facts
- The Tax Foundation estimated removing USMCA exemptions would increase taxes by $466 billion over the next decade, about $300 per U.S. household next year, and decrease U.S. output by about 0.1%
- Those ties were strengthened with the 1994 North American Free Trade Agreement (NAFTA), and fortified still with the 2020 United States–Mexico-Canada Agreement (USMCA )
- 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
- For example, Canada’s imports from Japan have increased from 13.7% in the first six months of 2025 to 16.6% in the same period this year, per JD Power data
Summary
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. Auto analysts blame the steep decline on a series of import taxes placed on Canada over the past 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. The U.S. auto industry relies heavily on Canada, which is the largest export market for American automakers—larger than the next 10 markets combined, according to a Royal Bank of Canada (RBC) analysis published last month.