by Tariff Issue for BMW X3 and X5 in Canada
Canadians planning to buy new BMW X3 or X5 models may face significant price increases. This is due to the tariff war between the USA and Canada, which could make vehicles manufactured in the USA considerably more expensive. This may force local consumers to seek alternatives among premium SUVs from other brands.
Impact of Tariffs on Sales
Last year, the X3 and X5 were the two most popular BMW models in Canada, with sales of 7,128 and 4,489 units respectively. However, they do not comply with the USMCA agreement, making them subject to various tariffs.
Why the SUVs Do Not Meet Requirements
Specifically, they have no more than 33% of components from the USA, Canada, or Mexico, which is significantly below the required threshold of 75%. Additionally, they use engines and transmissions imported from Europe, which are subject to an additional 25% duty even before assembly in Spartanburg.
After crossing the Canadian border, the finished vehicles are subject to an additional 6.1% tax, bringing the total duty to 31.1%. If BMW fully passes these costs on to customers, the price of a $50,000 model could increase by over $15,000, and a $100,000 model by $31,000. This could deter many buyers and encourage them to switch to competing brands.
General Price Increase
BMW’s Canadian division plans to raise prices to compensate for the tariffs, although the exact amount of the increase is not yet known. The increase will apply to the entire model lineup, not just those directly subject to duties, which will allow the company to distribute the financial burden.
The new situation has already affected demand for the X3 and X5 in Canada. In the second quarter, sales of these models fell by approximately 25% compared to the same period in 2024. The share of American-made BMW models in the Canadian market decreased from 51.1% to 38.3%.
These changes could have long-term consequences for the premium car market in Canada, where buyers are becoming increasingly sensitive to pricing. Brands that rely on global supply chains will have to adapt to new trade conditions to maintain competitiveness.
