Canada Lowers Tariffs on Chinese Electric Vehicles

Canada announced a tariff cut on Chinese electric vehicles, presented by Prime Minister Mark Carney, reshaping trade policy and the North American EV market. Learn more.

Canada is taking a sharp turn in its trade policy, opening the door to Chinese electric vehicles after years of effectively blocking them with punitive tariffs. The government has agreed to cut its 100% duty on Chinese-made EVs to a much lower rate within a defined quota, a move that could reshape parts of the North American car market.

The decision followed Prime Minister Mark Carney’s visit to Beijing and forms part of a broader compromise with China. In exchange for easing access for Chinese EVs, Beijing agreed to significantly reduce tariffs on Canadian agricultural exports, most notably canola seeds, a cornerstone of Canada’s farm economy.

Under the framework, up to 49,000 Chinese electric vehicles per year will be allowed into Canada at a 6.1% tariff. That cap is set to rise gradually, potentially reaching around 70,000 vehicles within five years. Even then, officials note, the volume would represent only a small fraction of Canada’s roughly 1.8 million annual new-vehicle sales.

Affordability sits at the heart of the government’s argument. According to Carney, most of these imported EVs are expected to carry an import price below 35,000 Canadian dollars, well under the country’s average new-car price, which now exceeds 60,000. At a time when vehicle costs are a growing concern for households, the promise of cheaper options gives the deal clear political appeal.

The agreement also marks a clear divergence from the United States, which has maintained a hard line on Chinese electric cars. Washington has already voiced concern about Canada’s decision, while reactions at home are mixed. Automakers and Ontario’s provincial leadership warn of potential risks to jobs and tightly integrated supply chains, whereas agricultural regions have welcomed renewed access to the Chinese market.

For China, the deal includes a pledge to cut combined tariffs on Canadian canola seed from 84% to about 15%, along with the removal of discriminatory duties on several other farm products. Ottawa sees this as a critical step toward restoring billions of dollars in annual exports that had been disrupted by the trade dispute.

It remains unclear which Chinese brands will be first to enter the Canadian market or how quickly the vehicles will appear in showrooms. Still, the agreement is already being viewed as one of Canada’s most consequential trade shifts in recent years, testing how the country balances affordability, industrial policy, and an increasingly complex geopolitical landscape.