New-vehicle prices in Canada are expected to rise beginning in June as U.S.-built pre-tariff inventory is depleted and replaced with vehicles subject to Canadian counter tariffs of up to 25 percent, though the actual price hikes will be more modest than initially feared.

J.D. Power’s Robert Karwel estimates an average four percent, or $2,000, increase in transaction prices, bringing the average to about $51,000, assuming worst-case scenarios where all tariff costs are passed on to consumers—though manufacturers are expected to absorb some costs to maintain sales stability. The impact will vary by brand and vehicle segment, hitting pickups and larger utility vehicles hardest.

Tariff rates have been softened by exemptions for Canadian and Mexican parts content in U.S.-built vehicles, and future tariff policies remain uncertain amid ongoing political and legal challenges.

Rather than raising sticker prices, automakers are likely to reduce incentive spending—currently averaging $5,000 per vehicle—making the true cost increase less visible to consumers.