‘America First’ Tariffs Backfire: Toyota Sales Slump in U.S. as Canada’s Auto Sector Accelerates Amid Trade Turmoil

DETROIT — President Trump’s aggressive tariff regime, intended to bolster American manufacturing, is instead sowing chaos in the auto industry, with Toyota Motor North America reporting a 21 percent plunge in September U.S. sales — its fourth consecutive monthly decline — while Canada’s automotive sector surges ahead with 5.6 percent year-to-date growth through October, fueled by Ottawa’s countermeasures and a pivot to electric vehicles.

The disparity, starkly illustrated in quarterly earnings and trade data released this week, has industry insiders sounding alarms of a potential North American meltdown. “We’re seeing the unraveling of a deeply integrated supply chain,” said Bryan Klumpp, an automotive analyst at S&P Global Mobility. “Tariffs meant to protect U.S. jobs are idling factories on both sides of the border, raising costs for consumers and risking $108 billion in annual losses for automakers.” With U.S. light-vehicle sales projected to dip to 16.2 million units in 2025 — 150,000 fewer than pre-tariff forecasts — and average prices rising 2.3 percent, the policy’s backfire is rippling from assembly lines to showrooms.

Toyota’s woes exemplify the tariff squeeze. The Japanese giant, which sells over 2 million vehicles annually in the U.S., absorbed $1.1 billion in duties during the second quarter alone, prompting executives to warn of $4 to $5 billion in total 2025 hits. September’s 21 percent drop, to 193,248 units, marked the steepest decline since the pandemic, driven by 25 percent levies on imports from Mexico and Canada — key sources for models like the RAV4 and Tacoma. “Consumers are balking at $3,000 to $5,000 price hikes per vehicle,” said Jack Hollis, Toyota’s North American chief operating officer. “We’re holding the line on incentives, but without relief, we’ll see more plant idlings and layoffs.” The company has already paused production at its San Antonio Tacoma facility for two weeks, furloughing 1,200 workers.

Across the border, Canada is emerging as an unlikely beneficiary. Through October, vehicle sales reached 1.6 million units, up 5.6 percent year-over-year, with projections for 1.8 million in 2025 — a 4.3 percent gain — per DesRosiers Automotive Consultants. Ottawa’s response to U.S. tariffs — slashing import quotas for General Motors and Stellantis by 24 percent and 50 percent, respectively — has lured foreign investment, including Volkswagen’s $800 million battery plant in St. Thomas, Ontario, promising 2,500 jobs by 2027. “We’re turning Trump’s threats into opportunity,” said Industry Minister Mélanie Joly. “Canada’s EV ecosystem — from lithium mines to assembly lines — is attracting the players fleeing U.S. chaos.”

The tariffs, imposed under Section 232 of the Trade Expansion Act citing national security, were meant to reshore production. Yet a Center for Automotive Research study estimates they’ll cost U.S. automakers $108 billion in 2025, equivalent to $4,240 per vehicle, while reducing North American output by up to 365,000 units and 18,000 jobs. Ford slashed its tariff-hit forecast from $2 billion to $1 billion after absorbing costs, but warned of $3 billion total exposure; GM echoed with $4-5 billion, idling its Fort Wayne plant for a week. “This isn’t protectionism; it’s self-sabotage,” said Matt Blunt, president of the American Automotive Policy Council. “Integrated chains mean a hit to Mexico ripples to Michigan.”

Insiders warn of a broader meltdown. S&P Global Mobility pegs a 30 percent chance of six-to-eight-week disruptions, including border gridlock and halted shipments, potentially slashing U.S. sales by 10 percent long-term. “Tariffs distort everything,” said Josh Meltzer of the Brookings Institution. “Canada and Mexico are diversifying to Europe and Asia; we’re left with higher prices and fewer options.” Goldman Sachs forecasts $2,000-$4,000 price hikes per vehicle, eroding affordability as interest rates hover at 6.5 percent.

Mr. Trump, en route to the G20 in Brazil, dismissed the data on Truth Social: “Fake News cries about tariffs while Toyota & others beg for deals! America First is WINNING — jobs coming home BIGLY! #MAGA.” Yet allies like Senator Lindsey Graham urged recalibration on Fox News: “Tariffs protect steel, but autos? We’re shooting our own tires.”

For workers like Sarah Petrie, a laid-off CAMI assembler in Ingersoll, Ontario, now commuting two hours for temp work, the abstract policy is visceral. “Tariffs were supposed to save American jobs, but they’re killing ours — and raising prices for everyone,” she said at a Unifor rally. As USMCA reviews loom in 2026, the firestorm risks fracturing North America’s auto heartland, turning “America First” into a shared lament.