Will the road of Chinese EVs to North America start with Canada?

• Canada is cutting import tariffs on a limited number of electric vehicles built in China.
• The number will be limited to 49,000 vehicles, a small part of the total market.
• However, some domestic automakers and politicians are sounding warnings.

Last month, Canadian Prime Minister Mark Carney announced an economic deal with China that would reduce or eliminate tariffs on several exports. For Canadians, the real economic impact was the reduction in tariffs on their huge rapeseed crop (the “can” in “canola” literally stands for Canada) from a stiff 85 percent to just 15 percent. What caught the auto industry’s attention, however, was the announcement that Canada, in a reciprocal move, would reduce the tariff on Chinese electric vehicles from 100 to 6.1 percent.

For the latter, there are some notable limitations. The number of Chinese EVs eligible for the reduced rate is 49,000 per year, an unprecedented decline in the Canadian market. Just under two million new cars found a home in Canada last year, meaning the Chinese EV exemption represents about 3 percent of the market. By 2030, there will be price caps on these imports, with 50 percent of them required to have a suggested retail price of approximately $26,000 ($35,000 CAD) or less.

Moreover, that number did not come out of the blue. Canada was already importing Chinese cars at about that rate before the 100 percent tariff was imposed several years ago. For example, Tesla imported about 40,000 Chinese-made electric cars into Canada in 2023, and both Volvo and Polestar also imported Chinese-made electric cars. There were also other non-EV standouts from China, such as the Honda Fit and, unexpectedly, some versions of the Lincoln Nautilus.

“A slippery slope,” says GM’s CEO

Despite the relatively small volumes here, some domestic automakers are expressing concerns. At a companywide meeting in late January, GM CEO Mary Barra referred to the tariff cut as a slippery slope, with the potential to undermine the North American auto manufacturing sector.

Thanks to cross-border trade tensions, this sector is currently facing challenges on multiple fronts. Thanks to trade agreements between Canada and the U.S. dating back to the 1960s, production on both sides of the border often involves traveling parts from different suppliers back and forth before they are finally assembled.

Perhaps the most interesting thing about the rate change isn’t the potential for a flood of low-priced, Chinese-built electric vehicles suddenly filling Tim Horton’s parking lot, but the possibility of a Chinese company building a factory on Canadian soil. By far the largest manufacturer of Canadian-made vehicles is Toyota’s plant in Woodstock, Ontario. This factory builds, among other things, the Toyota RAV4. (And yes, there is a Tim Horton’s on site.)

Toyota RAV4 in production in Woodstock, Ontario, Canada, in January 2026.

Canada has a long history as a test market for Japanese and Korean brands, such as the Honda S600 in the 1960s, early Mazda rotary-engined cars in the 1970s and Hyundai’s small Pony hatchback in the 1980s. So, as is the case in the Mexican market, new Chinese brands could emerge in hydropower-rich British Columbia and Quebec to assess the market.

For now, however, this rate change will likely benefit already established manufacturers like Tesla and Volvo. And the canola farmers of Alberta, Saskatchewan and Manitoba, who are all going to buy domestic large pickup trucks anyway.

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Brendan McAleer is a freelance writer and photographer based in North Vancouver, BC, Canada. He grew up on British cars, came of age in the golden age of Japanese sports compact performance, and started writing about cars and people in 2008. His special interest is in the intersection between man and machine, whether it concerns the racing career of Walter Cronkite or the half-century-long obsession of Japanese animator Hayao Miyazaki with the Citroën 2CV. He has taught both of his young daughters how to shift a manual transmission and is grateful for the excuse they provide to constantly buy Hot Wheels.