Canada could reshape the electric vehicle landscape in North America by removing its tariffs on Chinese electric vehicles, a move that would open a new market for Chinese auto companies and narrow export opportunities for American manufacturers.
Canadian Prime Minister Mark Carney announced earlier this week that he would meet with Chinese President Xi Jinping during the Asia-Pacific Economic Cooperation summit in Gyeongju, South Korea. The Wire China reported that Canada is considering scrapping its tariffs on Chinese EVs amid rising tensions between President Donald Trump and Carney.
Canada followed the United States last year in imposing a 100% tariff on Chinese-made EVs, as part of an effort to protect domestic manufacturing and curb China’s dominance in the market. In response to the tariffs, China placed levies on Canadian canola oilseeds and related products.
Since Trump took office, the administration has opposed policies and tax incentives imposed by the Biden administration and Democrats to boost the EV industry. At the same time, the administration has imposed sweeping tariffs on countries such as Canada and its auto industry, prompting automakers to move production into the U.S.
For instance, General Motors has announced plans to increase truck production at plants in Indiana and shift production from Mexico to the U.S.
However, Sam Abuelsamid, the vice president of market research for Telemetry, told the Washington Examiner that if American auto manufacturers “lose more and more of their potential export markets, then the Chinese will step in with better, cheaper products. There’s no reason why consumers outside of the U.S. wouldn’t want to buy those products.”
China has led the world in the EV market, offering electric and hybrid vehicles at lower prices and with more advanced features than U.S. automakers.
While China has continued to expand its EV footprint globally, the Trump administration has prioritized fossil fuels and traditional energy development. Abuelsamid said the administration’s strategy could limit U.S. automakers’ ability to compete in global markets.
“The risk that the industry faces if they follow what the administration seems to want them to do is that they create an island of products that they can’t sell anywhere else,” Abuelsamid said.
For example, Abuelsamid said consumers in Japan would not buy a Ford F150, which has nothing to do with tariffs, but vehicles such as that do not work in places such as Tokyo.
“If the U.S. automakers don’t continue to develop and pursue electric vehicles, the Chinese are going to do it,” he added.
Abuelsamid noted that in North America, several Chinese-made vehicles have been available in Mexico for many years, with those brands capturing 20% of the new vehicle market there. There are several Chinese-made EVs available in Mexico, including BYD’s Dolphin Mini, which costs from $21,000 to $23,000. The Chinese EVs are an attractive product for consumers in Mexico due to their affordability.
Mexico, meanwhile, is considering increasing its tariffs on Chinese cars from 20% to 50% to protect jobs.
If Canada opens its doors to Chinese EVs, it provides those companies with another “foothold” in the North American market, Abuelsamid said.
Canada’s possible rollback of tariffs on Chinese EVs is a response to trade tensions between the U.S. and Canada. Trump recently suspended trade talks with Canada and has threatened to place higher tariffs on Canadian goods after the country ran ads featuring President Ronald Reagan criticizing tariffs.
Loren McDonald, the CEO and chief analyst at the EV charging firm Chargeonomics, told the Washington Examiner that Chinese EV companies are “drooling at the opportunity to enter Canada, because then they’re basically surrounding the U.S.”
He added that “over time, it’s just going to wear us down, and there’s going to be factories in both markets.”
McDonald noted that China has an excess of EVs, with hundreds of companies manufacturing them. These vehicles are being exported to Europe, where they are gaining popularity, particularly brands such as BYD.
He said the next step for Chinese EV companies would be to enter the next-largest market, North America.
If a deal occurs, McDonald said Canada would encourage China to invest in the Canadian market by manufacturing there.
“Canada just doesn’t want to be the dumping ground” for the excess EVs, he said.
PERMITTING COUNCIL KEEPS MINING PROJECTS MOVING DESPITE GOVERNMENT SHUTDOWN
Canada has ambitious goals for EV sales, vowing to achieve 100% zero-emission vehicle sales for all new light-duty vehicles by 2035, with interim targets of at least 20% by 2026 and at least 60% by 2030.
Trump just finished a weeklong Asia trip, during which he has been signing trade agreements with multiple Asian nations on critical minerals and rare earths. Trump also met with Xi to discuss trade tensions between the two countries.
