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A trade war will be bad for the pocketbook of anyone looking for a new car.
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Baris Akyurek, vice-president of insights and intelligence at AutoTrader. home, said if imposed, President Donald Trump’s threatened tariffs will drive up prices in new and used markets.
“Assuming that all the increases would be passed on to consumers, new car prices would go up. (The amount) will depend on the make and model, what percentage of the car (parts) go back and forth (between Canada and the U.S. and Mexico) eight, nine times, sometimes, even more. Some cars will have a bigger impact, some cars will have a lesser impact. One thing is guaranteed is that prices will go up.”
As for the impact on used cars, Akyurek noted how during the pandemic, there was a big microchip shortage and supply chain delays.
“Fewer cars were produced and sold,” he said. “So, based on our estimate, 1.5 million fewer cars were sold between 2020 and 2023. So there was a lot of demand on cars because we couldn’t travel, we didn’t want to take public transportation, and all that stuff, so there was a high demand on used vehicles.
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“And based on our price index, what happened to used cars in 2021 specifically — prices went up 21.7% because of demand. So if a similar thing happens (because of the tariffs) with the new car demand because the prices are higher, we are probably expecting there would be an increase in demand on the used side.”
Akyurek added if tariffs are imposed, the Canadian dollar is expected to get weaker, which would lead to more Canadian cars heading south.
“This obviously exacerbates the situation,” he said. “If there’s more demand in the U.S., the Canadian dollar is weaker, more used cars would go down south and that would squeeze the inventory availability in Canada.”
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