Invest1 publisher3 min readPublished
US-built cars lose a fifth of their share of Canada's new-car market in a year
US-built cars fell to 28.4% of Canadian new-vehicle sales in the first half of 2026 from 35.4% a year earlier, JD Power Canada data show. Japanese and Korean builders took more than half of that lost share, and the US levy on Canadian cars and parts is expected to reach 50% in January.
The Investor · Invest desk
What happened
- The US-built share of Canadian new-vehicle sales ran at roughly 40% from about 2021 to 2025, and a decade ago it was nearly half.
- Japan's share of Canadian sales rose from 13.7% to 16.6% between the first halves of 2025 and 2026, South Korea's rose a point to 15.6%, and Europe's was flat.
- GM and Stellantis have reported billions of dollars in tariff losses, and Kelley Blue Book estimates tariffs add up to $6,000 to a car's price.
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Why it matters
- exposure The loss is in US automakers' largest export market, bigger than their next 10 combined per RBC, so a point of share lost in Canada costs more volume than a point lost anywhere else they sell abroad.
- decision If Kingston's cost ranking holds, an automaker choosing where to build for North American buyers has a tariff reason to pick Japan, South Korea or Mexico over the US and Canada.
- constraint Reshoring arrives after the cost increase: Ford's move of some Lincoln production from China is dated 2030, three years after the US levy doubles.
- cost About a third of the roughly 75,000 US manufacturing jobs lost since January 2025 were in motor vehicles and parts, so if tariffs drove the losses, auto workers are carrying much of the cost.
Seven points in a year is 35.4 minus 28.4 [1]. Measured against where US-built cars started, about a fifth of their Canadian position is gone: 7.0 divided by 35.4 is 19.8% [2]. Against the roughly 40% they held from about 2021 to 2025, the gap is 11.6 points [2][8].
Part of the lost share can be traced. Japan's share rose 2.9 points and South Korea's one point [3], so the two together took 3.9 of the 7.0 points, or about 56% [4]. The JD Power figures reported by Fortune do not say where the other 3.1 points went [5].
Auto trade between the two countries has topped $100 billion this year [7]. A US-built car sold into that trade is taxed at two points. Canada's retaliatory tariffs on American-made autos apply at the border [5]. The US tariff applies earlier, on the parts, because no vehicle is built in one country and American cars depend on imported components [10]. When the 25% US levy doubles on Jan. 1, 2027, as expected, it reaches Canadian auto parts and steel as well as vehicles [4]. A US plant importing those parts would pay 50% on them [6]. The finished car would still face Canada's tariff on the way back north [5].
Brian Kingston, CEO of the Canadian Vehicle Manufacturers' Association, which represents America's major automakers in Canada, told Automotive News Canada that "every metric points to the same thing: U.S. trade policy is damaging the U.S. auto industry." [8] His members are the companies paying the tariffs. He put the cost case to Fortune in plain terms. "We're in this odd situation where it is now more cost-effective to build a car in Japan or Germany, South Korea, Mexico, and bring it into North America than to build here in North America because of all of the mounting tariff costs," Kingston said [9]. He said tariffs in Asia and Europe are lower and supply chains there are more integrated [15].
Some of the evidence cuts the other way. The doubling is expected, not enacted [4], and a deal before January would take it off the table. Japanese and Korean gains explain only 56% of the drop [4], so the cost argument has not yet been shown to cover part of the loss. Toyota's $3.6 billion San Antonio assembly plant could restore some US manufacturing roles over time [13].
I still think the January rate pushes the US-built share below 28.4%. It raises input costs on cars already paying Canada's retaliatory tariff [4][5], while the Japanese and Korean builders gaining share face lower tariffs, according to Kingston [15]. If JD Power Canada's first-half 2027 figure holds at or above 28.4% with the 50% rate in force, the cost argument is wrong [1][6].
What to watch
- Whether Canada raises its retaliatory tariffs on American-made autos when the US rate doubles on Jan. 1, 2027.
- GM and Stellantis tariff-cost guidance for 2027, to see how much of a 50% parts rate they absorb before prices rise.
- Second-half 2026 JD Power Canada data, to see whether Japan and South Korea keep adding share at their first-half pace.