Canada will allow up to 49,000 Chinese electric vehicles into the country annually at a 6.1% tariff, with more than half priced below $35,000 within five years, Prime Minister Mark Carney announced in mid January after visiting Beijing.
Carney announced last week a new auto sector strategy aimed at positioning the country as a leader in next-generation vehicle manufacturing.
Amid concerns from auto workers about the Chinese vehicles flooding the Canadian market, the PM pledged to support workers building “lower emission, autonomous, more reliable, more affordable vehicles.”
“The choices we make now will shape the Canadian auto industry for decades to come,” Carney wrote on X on Sunday before setting an ambitious target.
“Our new strategy will build a stronger Canadian auto sector, where Canadian workers build the cars of the future and sell them to the world,” the country’s PM added.
The X post comes two days after Industry Minister Mélanie Joly announced that the government is in talks to establish a joint-venture EV plant with Chinese automakers for global exports.
In a speech Friday, Carney invoked Canada’s automotive history to frame the industry’s current transformation, citing the country’s role in assembling the Ford Model T and its rise to become the world’s second-largest car producer by the end of the First World War.
“These feats were the result of Canadian determination and ingenuity,” Carney said. “They were the product of an industry that adapted, pivoted, and when necessary, transformed. That’s what we must now do to build the vehicles of the future.”
The prime minister outlined a vision for “lower emission, autonomous, more reliable, more affordable” vehicles as part of building what he called “a stronger, more resilient, more independent Canadian economy that creates great jobs here at home.”
“That is what we are building together. That is a confident Canada. That is Canada strong,” Carney said.
Joint-Venture EV Plant With China
As reported last Friday, Industry Minister Mélanie Joly told Bloomberg that the government is in talks to establish a joint-venture EV plant with Chinese automakers for global exports.
Canadian auto parts suppliers and manufacturers Magna International, Linamar, and Martinrea International could partner in a joint-venture assembly plant, Joly said.
The Minister revealed there are “active conversations” on how domestic firms might complement new Chinese investment, including with Ottawa-based software developer QNX, owned by BlackBerry.
As reported by EV in late January, Joly confirmed meetings with Volkswagen, as well as two of China’s largest automakers, BYD Co. and Chery Automobile Co.
Compact SUVs Arriving?
Small SUVs dominate Canada’s EV market, representing nearly half of all sales — a trend that suggests Chinese automakers will prioritize compact and subcompact models for their initial exports to the country, according to J.D. Power.
Robert Karwel, director of customer success for the data and analytics division at J.D. Power Canada, said Chinese EVs could arrive at prices 10% to 15% lower than comparable Canadian models.
Based on last year’s average subcompact EV price of $42,000, that would put Chinese alternatives in the $35,700 to $37,800 range.
Auto Task Force
The announcement follows Joly’s creation of an auto task force with Ontario earlier this month to protect jobs and coordinate investment strategy amid US tariff threats.
Joly said the government is reviewing its approach to EV mandates as part of broader auto sector discussions.
“We can’t look at one policy, we have to look at everything that is affecting the auto workers,” she said.
Doug Ford, Ontario’s Premier, has previously criticized the agreement with China while calling the country’s cars “spy vehicles.”
In a separate reaction, the Premier also warned the agreement gives Beijing a “foothold in the Canadian market” and puts the province’s auto industry at risk.
China Trade Deal
The strategy comes as Canada navigates trade tensions with both the US and China.
Carney and Chinese President Xi Jinping agreed during the prime minister’s state visit to Beijing that Canada will allow an annual import quota of up to 49,000 Chinese EVs at a 6.1% tariff rate, replacing the 100% duty imposed in 2024.
In exchange, China will reduce tariffs on Canadian canola.
