Canada’s Conservative Party is pushing back against the government’s trade agreement with China on electric vehicles, arguing the deal undermines a domestic auto industry already reeling from US tariffs and thousands of job losses.
Raquel Dancho, the Conservative shadow minister for industry and the party’s direct counterpart to Industry Minister Mélanie Joly, called the arrangement “frankly incomprehensible” in an interview with the Canadian media outlet Means and Ways.
“Given what’s happening to our Canadian auto sector, that we would bring in a much cheaper alternative of car from a market that’s heavily subsidized and controlled,” she said, adding that the two industries are “not competing apples for apples here.”
The agreement, signed in January during Prime Minister Mark Carney’s state visit to Beijing, allows up to 49,000 Chinese-made EVs into Canada annually at a 6.1% tariff — replacing the 100% surtax Ottawa had imposed in late 2024.
The government has said the quota could rise to 70,000 within five years, with more than half of imports expected to carry price tags below $35,000.
As reported earlier this week, the first Chinese automakers set to enter the Canadian market by the year’s end include BYD, Chery, and Geely.
Surveillance Concerns
Dancho also raised national security objections, echoing warnings previously made by Ontario Premier Doug Ford about the data collection capabilities of connected Chinese vehicles.
“We’re hearing loud and clear from security experts: Chinese electric vehicles have the capability, for all intents and purposes, of being surveillance vehicles,” she said.
The Conservative Party has passed a motion at the House of Commons Industry Committee to study the issue, with the aim of hearing from experts on both the security threat and the impact on the existing auto sector.
Auto Strategy Under Fire
The Carney government announced a package of measures in early February aimed at transforming Canada’s auto industry, including $3.1 billion from the Strategic Response Fund and up to $100 million from the Regional Tariff Response Initiative.
Dancho dismissed the package on X, writing that “any jobs for Canadian auto workers are welcome — but will they last?”
“Despite billions in EV subsidies, layoffs ensued in Ingersoll and Brampton.
Ottawa’s response has been to subsidise foreign EVs,” the MP wrote, referring to job cuts at General Motors‘ Ontario plant and Stellantis’ Brampton facility — both of which redirected production to the United States amid the tariff escalation.
The Trade War With Washington
The auto sector sits at the centre of a deepening trade conflict between Canada and the United States.
According to the government, more than 90% of Canadian-made vehicles and 60% of domestically produced auto parts are exported to its southern neighbour.
Canadian auto parts that do not comply with USMCA rules face a 25% tariff under Section 232 when entering the United States.
A separate baseline duty on non-USMCA-compliant Canadian goods was raised from 25% to 35% in August 2025, compounding costs for manufacturers whose products fall outside the agreement’s rules of origin.
Canada has maintained a 25% counter-tariff on US-origin vehicle imports that do not comply with the agreement, a measure Ottawa says is necessary to protect domestic manufacturers.
The USMCA joint review must be convened by July 1 under Article 34.7, but officials in all three signatory countries see little prospect for productive trilateral negotiations.
Canada is moving to diversify its partnerships, while the United States has shown limited interest in renegotiating with its northern neighbour.
Dancho described the broader economic situation as the biggest challenge Canada faces.
“For the last 10 years, we’ve had stagnant productivity growth. We’ve had our natural resource projects blocked. It’s really been a lost decade,” she told Means and Ways.
“And then enter Trump 2.0 and completely upending, frankly, the existing framework of trade between the two countries.”
Under Review
When the United States introduced tariffs last year, followed by Canada’s retaliatory duties, several automakers began shifting production back to US plants rather than relying on Canadian facilities.
The moves contributed to thousands of job cuts in Canada’s auto sector.
After General Motors and Stellantis cancelled or reduced their Canadian production plans, the government cut their annual remission quotas — by 24.2% for GM and 50% for Stellantis.
The remission framework allows Canadian automakers to import a set number of US-assembled vehicles tariff-free, provided they maintain domestic production levels and follow through on planned investments.
Since announcing its auto strategy in February, the government has opened consultations on strengthening the framework to ‘reward companies that produce and invest in Canada.’
Vehicle assemblers, parts producers, importers, workers’ associations, and unions have until April 13 to submit feedback on potential changes to tariff remission for surtaxes on US-made passenger vehicles.
