The Canadian fleet perspective on auto tariffs
April 24, 2025
Managing fleets in Canada recently got a little more complicated. On April 9, 2025, Canada introduced a 25% tariff on certain U.S.-made vehicles. If you're left wondering exactly how these tariffs will impact the various aspects of fleet management and total cost of ownership (TCO), you’re not alone. This post will cover the latest developments and explore practical strategies to help Canadian fleet leaders navigate these changes and stay ahead of the game.
What is the latest development with auto tariffs?
Canada implemented 25% tariffs on U.S.-made vehicles that don’t meet Canada-United States-Mexico Agreement (CUSMA) rules and those with non-Canadian or non-Mexican content. According to Canada’s Department of Finance, it’s a direct response to U.S. tariffs on Canadian goods.
It's important to keep in mind that while parts are exempt for now, these tariffs are set to shake up the costs of American-made vehicles entering Canada. So, if your fleet leans heavily on U.S. vehicles, now’s the time to start planning for the future.
How does it impact fleet management?
The immediate effects of the auto tariffs on fleet operations revolve around cost and availability. While it’s unclear exactly how much of the tariff cost will be passed on to consumers, it’s likely that at least a portion will be added to the price of imported vehicles. This means higher purchase prices, which could make fleet management more costly overall and increase TCO in the long term.
The impact doesn’t stop at the initial purchase price. Tariffs will ripple through various cost buckets, influencing the total cost of ownership for fleet operators. Leasing costs will climb with purchase prices, while maintenance and repair expenses may increase for vehicles containing U.S.-made parts. Other indirect costs, like resale values and fuel, could also be affected. Savvy fleet leaders will need a clear strategy to stay ahead of potential cost increases.
Also, vehicles sourced from the U.S. may face shortages. Tariffs often trigger supply chain disruptions, and original equipment manufacturers (OEMs) may shift strategies in response, which could temporarily reduce certain models' availability.
Supply chain considerations
North America’s automotive supply chain is so tightly interconnected that these tariffs are sure to cause some challenges. While parts are temporarily exempt, nobody can say for certain how long this exemption will be in place.
The Ford F-150, for example, isn’t made in Canada but is very popular with many Canadian fleets. Higher tariffs could easily mean higher costs for vehicles like this, which are staples for lots of businesses. Keep an eye on OEM price protections and get those orders in before any big changes happen.
For fleet managers, staying nimble is the name of the game. Keep close tabs on production timelines, work hand-in-hand with OEMs, and plan ahead for potential bottlenecks. It’ll make a world of difference in managing the ups and downs of supply chain challenges.
Auto tariff response strategies
When the road ahead gets bumpy, a strategic approach can help fleet operators avoid huge setbacks. Here’s how fleet managers in Canada can tackle these auto tariff-related challenges head-on and keep things running smoothly without breaking the bank.
- Prioritize domestically built vehicles
One proactive way to combat tariff expenses is to prioritize vehicles manufactured in Canada or that comply fully with CUSMA requirements. These models are less likely to face price hikes, helping keep procurement costs manageable. Thankfully, many high-quality fleet options are made in Canada. - Diversify supplier relationships
Building relationships with multiple OEMs can offer flexibility when one supplier’s costs or availability shifts dramatically. Diversifying your supply chain can help prevent bottlenecks and open access to better priced vehicles. - Lock in price protections
Keep an eye on updates from your OEMs about price protection agreements. Submitting orders early can also help you avoid increases tied to future tariffs. However, these agreements may change rapidly, so timely action and strong communication with suppliers are critical. - Focus on fleet optimization
The changing tariff landscape is an opportunity to re-evaluate your fleet’s efficiency. Consider optimizing your fleet size by eliminating underutilized vehicles or investing in alternative solutions like electric vehicles (EVs) or hybrid options to reduce long-term fuel and maintenance costs. The initial investment in lower carbon-emitting vehicles may be offset by savings down the line, paired with potential sustainability benefits.
Long-term implications on fleet management
These tariffs aren’t a one-time disruption; they point toward growing economic tensions and evolving rules that fleet leaders must account for in their long-term strategies.
Over time, tariffs might encourage Canadian fleet operators to adopt procurement strategies centered around increasing the use of domestic models or vehicles with high Canadian or Mexican content. This, in turn, could foster stronger relationships with local suppliers and manufacturers, creating a more secure procurement pipeline.
Ultimately, fleet operators will need to evaluate their vehicle selection process, integrate flexibility into their supply chain plans, and adapt procurement strategies to avoid being blindsided by long-term cost increases or availability issues.
Staying informed is key to navigating auto tariffs
Navigating the 2025 tariffs will undoubtedly challenge Canadian fleet operators, but staying informed is your first line of defense. Canadian fleet leaders should keep a close watch on updates from the Government of Canada regarding tariff policies and potential countermeasures.
Also, be sure to take advantage of resources like Element’s operation alert and response center, regularly check industry news, and sign up for alerts from organizations that monitor supply chain impacts. By staying ahead of developments, fleet managers can adapt their strategies promptly, reducing fallout from sudden changes. For any specific questions, please reach out to Element’s team of trusted experts.
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