Escalating US-Canada trade war can derail your plans to import a car

The Canada-U.S. trade relationship just hit another wall. After trade talks collapsed on August 22, 2026, the U.S. raised tariffs on $27.6 billion of Canadian goods (such as automotive parts and steel) to 50%—an escalation in a dispute that has rattled North American auto markets since early 2025. Canada announced dollar-for-dollar counter-tariffs on $27.6 billion worth of U.S. products, set to take effect September 8. 

In response, U.S. President Trump threatened to double the current 25% rate on Canadian vehicles and parts to 50%, effective January 1, 2027—though that increase has not yet been translated into a formal, enacted tariff schedule.

The tit-for-tat trade war remains fluid and fast-moving. For Canadians eyeing a deal on a vehicle south of the border, the timing couldn't be worse. Canada's existing 25% retaliatory surtax on imported U.S. passenger vehicles and light trucks has been in place since April 2025, and with the situation continuing to unfold in current time, tariff relief appears unlikely anytime soon.

A new LowestRates.ca survey finds that while 43% of Canadians would consider importing a vehicle if total import costs stayed under $5,000, the reality is that today's tariffs, fees, and compliance costs often blow past that threshold before a buyer even gets to a provincial registration desk. Only 8% of respondents say they are likely to import a car within the next two years—and 52% say no outright.

Nearly 32% of survey respondents are undecided on the merits of bringing foreign cars into Canada. 

Top barriers that seem to prevent surveyed Canadians from importing are import fees and duties, as well as not knowing how the process works. Car modifications to conform with Canadian standards, availability of car parts and repair costs, and the registration and insurance process were other cited concerns. 

How much in savings makes importing a car worth it? 

At least $10,000 in savings on the purchase price would make importing worth it for about 64% of Canadians. 

Of those surveyed, the threshold breaks down as follows: 

• 36% would move at $5,000–$10,000 in savings 
• 41% need $10,000–$20,000 in savings on the purchase price 
• 24% need more than $20,000 in savings 

In the midst of tariff uncertainty, a significant level of savings may be hard to achieve on cars from the U.S.  

Why are foreign vehicle import fees and duties the biggest barrier for Canadians? 

The total cost of importing a vehicle has two layers: what you pay at the border, and what you pay before you can drive your imported car in Canada. 

Since April 9, 2025, U.S.-origin vehicles imported into Canada have been subject to a 25% surtax (i.e., the value for duty for the surtax is calculated at 85% of the total value for duty of the goods), introduced in response to U.S. tariffs on Canadian-made vehicles. That surtax was renewed for a second year in April 2026 and remains in force until April 8, 2027. A remission framework that provides surtax relief applies only to eligible Canadian-based auto manufacturers, not to individual consumers importing for personal use.  

⚠ Tariff situation is changing rapidly: Canada's 25% surtax on U.S.-origin vehicles remains in effect as of August 2026. However, with U.S. counter-tariffs escalating and after Canadian retaliatory measures take effect September 8, 2026, costs could shift significantly. Verify current rates with CBSA before making any purchase decision. 

Costs at the border

On a $30,000 U.S.-origin vehicle, the 25% surtax (85% of the total value for duty) alone adds approximately $6,375 in purchase costs. A $325 RIV fee, $100 air conditioning excise tax, GST, provincial taxes, and any compliance modifications are additional charges compared to local options. Total import taxes and fees for bringing a U.S. vehicle into Canada is well above $5,000 before you've even registered the car. 

The exchange rate factor 

Vehicle prices in the U.S. are listed in U.S. dollars. With the USD-CAD year-to-date exchange rate around 1.388, any U.S. vehicle purchase price advantage shrinks further after conversion. Remember to factor in the exchange rate when comparing vehicle prices. 

Possible exemption (new residents only): You may qualify for a break in duty and surtax import fees under Canada’s settler’s effects exemption if you owned, possessed, and used the vehicle before you moved to Canada. You would need to import your car for personal use, not resale. Your vehicle generally cannot be sold for at least 12 months after importing. 

Related: Top 10 most stolen cars in Canada for 2025

What is the process involved in importing a car into Canada? 

The starting point for importing a car is checking Canada's RIV admissibility list. If your vehicle isn't on the RIV list, it can't enter Canada regardless of what you pay at the border.  

Vehicles from the U.S. or Mexico are generally the easiest to import, especially if they were originally manufactured for the North American market.  

Vehicles from outside the U.S. and Mexico (e.g., Japanese 'grey market' cars) generally cannot be imported, unless they fall under very limited exceptions. It’s a criminal offence to import a vehicle into Canada that does not meet the requirements of the Motor Vehicle Safety Act. Offences and penalties are described in Section 17 of the Act. 

Related: How to make sure that the car you're buying is not stolen? 

How many days do you have to make your imported car compliant with Canadian standards? 

After clearing customs, you have 45 days to make compliance modifications on your imported car before you can drive it locally. RIV issues a checklist of required changes to complete and pass an inspection at an authorized facility (mostly  Canadian Tire locations). 

Common compliance requirements: 

• Speedometer must display km/h (primary unit) 
• Daytime running lights may need to be enabled or added 
• Headlights may need replacement (confirmed in your RIV checklist based on your specific vehicle's compliance with CMVSS 108 standards) 
• All manufacturer recalls must be cleared before inspection 
• Once your imported car passes inspection and you receive a stamped RIV Form 2, you can proceed with provincial registration. 

Learn more: The difference between Front Wheel Drive, Rear Wheel Drive, All Wheel Drive, and Four Wheel Drive 

How to insure your imported car 

For the most part, insuring an imported vehicle works just like any other car in Canada—you can shop rates, compare insurers, and choose standard coverage (liability, collision, comprehensive). 

There are a few import‑specific details to consider or discuss with your insurer: 

• Vehicle valuation: Insurers may have less data for imported models (especially JDM or European cars), which can affect how the vehicle is valued or depreciated in a claim. 
• Coverage availability: Some insurers may limit or decline collision/comprehensive coverage for certain imports, particularly right‑hand‑drive vehicles or models not sold in Canada. 
• Parts and repair costs: Imported vehicles can have higher repair costs or longer part wait times, which may result in higher premiums. 
• Modifications and compliance: Any changes made to meet Canadian standards (e.g., lighting) should be disclosed to confirm full coverage. 
• VIN and eligibility: Make sure your foreign-made vehicle is fully admissible and passes through the RIV process—insurers typically require this before issuing full coverage. 

Imported vehicles may be harder to value and insure, so it’s worth confirming coverage details early, especially for non‑U.S. imports.  

How to register your imported car  

Once your vehicle has cleared customs, passed its RIV compliance inspection, and you've secured insurance, registration follows the same provincial process as any other vehicle with a few additional steps: 

• Obtain a completed RIV inspection certificate confirming the vehicle now meets Canadian standards. 
• Get a safety inspection from a licensed provincial inspection station (required in most provinces for any imported used vehicle). 
• Take your customs documentation (CBSA Form B3 or B15), RIV certificate, safety inspection certificate, and proof of insurance to the provincial motor vehicle authority. 
• Pay any remaining provincial taxes and registration fees. 

Keep all your customs and importation paperwork. You may need it if you ever sell your vehicle, and some insurers will ask for customs clearance proof. 

Ultimately, the 25% surtax alone outpaces what most Canadians say would make importing worthwhile. If the tariff environment eases, the process of buying a foreign car and bringing it into Canada may be more manageable than most people assume. 

Learn more: A guide to home and car insurance for newcomers to Canada

Frequently asked questions (FAQ) 

Can I import a car temporarily without paying full duties?  

Possibly. The CBSA has provisions for importing vehicles temporarily (for example, if you're on a work permit for a defined period). A temporary import requires a security deposit equal to duties and taxes that would be owed, refunded when you export the vehicle. Consult a licensed customs broker for your specific situation. 

How long does the RIV compliance process take?  

You have 45 days from the date of importation to complete required modifications and pass a provincial inspection. Many people complete the RIV process in two to three weeks if vehicle modifications are straightforward. 

Can I import a right-hand drive vehicle into Canada? 

No—Canada drives on the right and only left-hand drive vehicles may be permanently imported and registered. Visitors can import an RHD vehicle temporarily, but the car cannot be permanently registered for road use. 

Is it cheaper to buy locally or import?  

For most people, buying locally can be cheaper when you factor in shipping costs, import duties, GST, RIV fees, potential compliance modifications, and potentially higher insurance costs for imported vehicles. You can consider importing if you have a strong emotional attachment to a specific vehicle, or if you own a high-value car that would cost significantly more to replace in Canada.