British Columbia Industry Group Warns of New Car Price Hike Due to Rising Aluminum and Steel Tariffs

Fresh alarm is spreading throughout Canada’s automotive sector following new U.S. tariffs that will see levies on aluminum and steel double from 25 per cent to 50 per cent. The move is expected to ripple through the supply chain, with industry leaders warning that consumers could soon face higher prices for new vehicles.

Blair Qualey, President and CEO of the New Car Dealers Association of BC, notes that the sector was already under pressure before the latest tariff hike. “It means a lot for the manufacturers who are building vehicles in the United States. They’re the ones who are going to feel the brunt of that double tariff on steel and aluminum,” he said. For Canadians in provinces like British Columbia, where many cars are imported from the U.S., the additional costs could be unavoidable. “Of course, if folks in Canada and British Columbia are purchasing vehicles that are made in the United States, then there will be that extra tariff added to the price of vehicles. It’s just more pain.”

Qualey stressed that, in the end, consumers typically absorb these cost increases. Manufacturers may try to lessen the immediate impact by stockpiling inventory, but he warns this strategy offers only short-term relief. “Some of them are doing their best to absorb some of the tariffs, but that won’t be able to last for too much longer. And at a certain point, sooner than later, the price pain is going to filter its way downstream and wind up in the lap of the consumer,” he explained.

While there are currently no specific tariffs on car parts, the majority are produced from steel and aluminum—now subject to the increased levies. Qualey cautioned vehicle owners about potential rising costs for repairs as well. “If a part for a vehicle is made in Canada and comes from the United States … then that will also have a tariff on it and I think everybody is trying to sort out a number of parts that are manufactured and portions of vehicles before they get added to the final assembly that go back and forth across the Canada, U.S., and Mexico border many times. We’re still trying to sort out if the tariffs are stacking on all of those trips back and forth and how that’s going to work out,” he pointed out.

The complexity doesn’t end there. Additional financial strain could push smaller manufacturers on either side of the border out of business. “If one or several of those wind up in trouble because they can’t afford all the extra financial pain that’s coming from these tariffs, they might wind up going out of business. And that’s happened in the past,” Qualey added. A disrupted supply chain could have cascading effects, as many companies depend on the same suppliers for essential components.

“The challenge is that many manufacturers may use the same supplier for parts, and if one supplier goes down, that can drastically impact the manufacturer of vehicles. It’s a complicated, convoluted situation with pain around every corner, it seems.”

Prior tariffs, including Canadian countermeasures, were already estimated to add approximately 12.5 per cent to the cost of vehicles. With the latest increases, Qualey suggests prospective buyers contact dealers directly to understand how pricing for specific brands could be affected in the near future.

He adds that while there is current availability of new cars, how long inventories can last is unclear. In response, Qualey is urging provincial leaders to consider measures to ease the burden on consumers, including a possible provincial sales tax holiday on new cars and trucks. He also calls for changes to the electric vehicle rebate program and an update to the so-called ‘luxury tax’, which currently applies to most new vehicles given the average sale price now sits above $66,000.

Prime Minister Mark Carney condemned the U.S. tariffs as “unjustified, illegal,” warning that the repercussions will be felt on both sides of the border. He emphasized ongoing negotiations with American officials and reassured the public that discussions are progressing, although no concrete timeline or plan for retaliation was offered.

“We will take some time, not much, because we are in intensive discussions right now with the Americans on the trading relationship. Those discussions are progressing. I would note that the American action is a global action, it’s not one targeted at Canada.”

As car dealers, manufacturers, and consumers alike brace for the impact of the new tariffs, many are watching closely to see if further government action will be taken to help mitigate what could become significant increases in the cost of owning or repairing a vehicle.