by Impact of Tariffs on BMW X3 and X5 in Canada
Popular BMW X3 and X5 models, manufactured in the USA, do not meet USMCA standards regarding the content of components from North America. This leads to the application of significant customs tariffs, which could substantially increase their cost for Canadian buyers. Both models were the best-selling for BMW in Canada in 2024, but their affordability is now at risk.
Details of Non-Compliance and Consequences
According to USMCA requirements, vehicles must have at least 75% of components from the USA, Mexico, or Canada to avoid tariffs. However, the X3 and X5 have only about 33% of such content. Furthermore, they use engines and transmissions imported from Europe, which further complicates the situation. Currently, these models are subject to an additional 6.1% duty upon import into Canada, and the total tax burden can reach up to 31.1%.
As reported by Auto News, even before assembly begins in Spartanburg, these components are subject to 25% tariffs.
This means the cost of a $50,000 model could increase by $15,000, and a $100,000 model by $31,000. Such changes could deter many potential buyers and force them to consider alternative brands.
Planned Price Increases and Impact on Sales
BMW’s Canadian subsidiary plans to raise prices for all models, not just those directly affected by the tariffs. This will allow the company to distribute the financial burden caused by the policy of former US President Donald Trump. Although the exact size of the increase has not yet been announced, dealers have already confirmed that the changes will affect the entire model range.
The impact of the tariffs is already being felt: in the second quarter, sales of the X3 and X5 fell by 25% compared to the same period in 2024. The share of US-made BMW models in the Canadian market decreased from 51.1% to 38.3%, indicating growing buyer caution.
This situation could have long-term consequences for the premium SUV market in Canada, where German brands traditionally dominate. Rising prices will not only reduce the affordability of these models but could also provoke structural changes in automotive supply chains, forcing manufacturers to seek new ways to comply with international agreements.
