On the weekend Canada And China has reached a trade deal that could allow Chinese electric vehicles (EVs) to be imported into the country.
Under the agreement, Canada will reduce the 100 percent tariff on Chinese-made electric vehicles to 6.1 percent for the first 49,000 units per year, a figure that will rise to 70,000 cars per year by the agreement’s fifth year.
In return, China will reduce tariffs on Canadian canola seed from 85 percent to 15 percent in March.
Although Chinese electric vehicles now face fewer financial hurdles in the Canadian market, it could be a while before Chinese vehicles head to the Great White North as no manufacturer has announced plans to enter the market. We also don’t know which vehicles would comply with Canadian car design regulations, which closely match those in the United States.
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Even if Chinese automakers exhaust their low-tariff allotment, Chinese electric vehicles will account for only a tiny portion — less than 3.7 percent — of Canada’s new car market, which totaled 1.9 million vehicles in 2024, according to Statistics Canada.
The Canada-China trade deal is part of a push by Canadian Prime Minister Mark Carney to diversify the country’s trade base away from the United States.
Doug Ford, premier of Ontario, the province where all of Canada’s auto plants are located, criticized the trade deal, saying: “The federal government is inviting a flood of cheap, Chinese-made electric vehicles, with no real guarantee of equivalent or immediate investment in Canada’s economy, automotive sector or supply chain.”
Since the Second World War, Canada’s economy has been closely intertwined with its southern neighbor. Their tight trade and regulatory environment led to the signing of NAFTA in 1994, a free trade bloc that includes Canada, the United States and Mexico.
Relations between Canada and the U.S. went from cozy to sour when President Donald Trump, beginning his second term in 2025, began referring to Canada as America’s “51st state” and began imposing tariffs on a variety of Canadian products, including cars and auto parts, in what he said was an attempt to stop the flow of illegal drugs into the country.
This has led to the two countries imposing retaliatory tariffs, a sharp decline in southbound holiday traffic and Canadian liquor retailers refusing to carry American rum in their stores.
According to TD Bank, before last year’s crackdown, Canada was the U.S.’s second-largest trading partner after Mexico.
The deal announced over the weekend marks a significant upturn in relations between Ottawa and Beijing, which have been frosty since 2017, when Meng Wanzhou, chief financial officer of Chinese communications giant Huawei, was arrested in Vancouver at the request of American officials for violating sanctions against Iran. In response, China arrested two Canadians.
In 2024, near the end of the Biden presidency, Canada followed the United States and imposed a 100 percent tariff on electric vehicles manufactured in China. In the 2025 Canadian election, Mr. Carney called China the country’s biggest security threat.
While Made-in-China has no presence in Canada and the US, they have made inroads in Mexico. In early 2026, Mexico increased tariffs to a maximum of 50 percent on all cars imported from countries without free trade agreements, with tariffs on Chinese-made electric vehicles increasing from 15 to 50 percent.
