- Canada has reduced its tariff on imported Chinese EVs from 100% down to 6.1%.
- Imports are capped at 49,000 cars for the first year, growing to 70,000 by year five.
- Some Canadian politicians aren’t too happy with the deal, citing cybersecurity concerns and hurting Canada’s relationship with the U.S. Several American officials expressed concerns as well.
Once, the United States and Canada moved almost entirely in lockstep on manufacturing issues—especially when it comes to the auto industry. Cars, parts and the manufacturing of both are closely tied together on both sides of the border, so what’s been good for one country has long been considered good for the other.
But that partnership saw its biggest breakdown yet this week as Canada struck a deal to reduce its 100% tariffs on Chinese-imported electric vehicles, opening North America’s deeply intertwined auto industry to a whole new level of competition.
Granted, this break in policy isn’t entirely unprecedented. Since President Donald Trump took office last year, Canada’s relationship with the U.S has been incredibly tumultuous, as Trump has openly challenged Canada’s sovereignty while instituting tariffs that many experts say were meant to pummel Canada into submission. Amid those trade battles with the U.S., Canada has been open about its desire to decouple from its neighbor to the south.
But what started with alcohol has escalated to the car market, and while many Canadian buyers squeezed out on costs might rejoice at the idea of more $35,000 (about $25,000 U.S.) options, this development is hardly seen as a win by everyone.
Photo by: Divulgação
Doug Ford, the Premier of Ontario, has been vocal to the Canadian press about how concerned he is, both for international relations and for what he described as potential threats to national security.
“It’s just a terrible, terrible, miscalculated decision by the Prime Minister,” Ford said at a press conference after the country’s leader, Mark Carney, struck the deal in Beijing. “This is a self-inflicted wound to an already injured Canadian auto industry. Finding a resolution to U.S. auto tariffs just got more difficult.”
Ford’s contention is understandable. As a conservative, he’s on the opposite side of the fence as the liberal Carney, but the region he represents includes Canada’s biggest auto manufacturing sector. The region stretching from Windsor to Toronto is known as the Ontario Automotive Corridor because it’s such a carmaking powerhouse. But it has shrunk in recent years, and new competition from cheap Chinese imports could potentially devastate the region’s jobs and output.
Ford has also echoed the concerns that many U.S. politicians share—that Chinese cars could somehow spy on Western drivers and sensitive areas like military bases. Ford even said that there’s a possibility that these EVs may not even be able to drive into the U.S. because of “spyware” embedded into the cars.
Ford isn’t the only one not all that optimistic. Mike Murphy of the American EV Jobs Alliance, a nonpartisan group that promotes EV adoption across party lines, said in a statement that he feels the outcome is a result of the Trump administration bungling its trade deals with Canada. Murphy said the pivot is a result of trade deals that do not prioritize U.S. interests.
“American automakers and autoworkers are caught in the middle of the most expensive industrial transition in a generation,” Murphy said. “Automakers, both American and those of our democratic allies who proudly manufacture vehicles here, are investing billions to build affordable electric vehicles here at home, retrain workers, and retool factories. That effort is undermined by trade instability, unclear rules, and a hostile posture toward our closest North American and European trading partners.”
The Zero Emission Transportation Association, a U.S.-based EV advocacy group, also warned of wider risks to the auto industry.
“This dramatic shift in policy shows that the United States’ auto policies are out of step with the global market and risk harming future American technological dominance and American jobs,” Executive Director Albert Gore said in a statement. “If the United States does not invest in [EVs], our global competitors will. This is why it is so critical that we continue to invest in the electric vehicle and battery supply chain here at home.”
Is this just sabre-rattling? Perhaps. The trade deal is capped at 49,000 cars for its first year, expanding outward to 70,000 within five years. According to reporting from the CBC, this is only about 3% of Canada’s auto market. It’s also about the same number of Chinese-made cars once sold in Canada before it instituted a 100% tariff on Chinese EVs in 2023.
But three years is a long time in the EV world. It’s very plausible that any new Chinese imports coming into Canada in 2026 and beyond will be well-made, high-tech and high-range, not just cheap microcar alternatives to the Hondas, Fords and Chevrolets that Canadians drive.
Photo by: BYD
It remains to be seen just which Chinese car brands will be the first to get vehicles on the road. Canada’s new rate for imported Chinese EVs is now 6.1%, with the goal of getting cars under $35,000 CAD ($25,000 USD) on Canadian roads. From this kind of data, I expect cars like the BYD Seagull or Dolphin to show up, and probably fewer cars like the higher-dollar Zeekr 7x or any type of Denza.
Meanwhile, Unifor, Canada’s largest private-sector union, blasted the move, saying it threatens “the future of our entire auto sector.”
“This is a self-inflicted wound to an already injured Canadian auto industry,” Unifor National President Lana Payne said in a statement. “Providing a foothold to cheap Chinese EVs, backed by massive state subsidies, overproduction and designed to expand market share through exports, puts Canadian auto jobs at risk while rewarding labour violations and unfair trade practices.” Payne also said the move would only exacerbate trade tensions with the U.S.
South of the border, several U.S. officials also lambasted the decision, saying that it represents a major push to undercut North American car production and eventually break into the American market as well.
“I think they’ll look back at this decision and surely regret it to bring Chinese cars into their market,” U.S. Transportation Secretary Sean Duffy said at an event with other government officials at an auto factory in Ohio. U.S. Trade Representative Jamieson Greer, on the same tour, also said that Trump planned to continue “protecting this market” from Chinese EV imports.
But the president sang a different tune on Friday, days after he reiterated his interest in Chinese automakers building cars stateside.
“That’s OK, that’s what he should be doing,” Trump said of Carney during an event at the White House. “It’s a good thing for him to sign a trade deal. If he can get a trade deal with China, he should do that.”
The first wave of imports could arrive in March or April, officials said. One way or another, it feels like a major domino just fell in North America, and that it won’t be the last.
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Additional reporting from Patrick George
