Canada strikes EV deal with China
Canada has agreed to allow the import of up to 49,000 Chinese electric vehicles at a reduced tariff rate of 6.1 per cent for the domestic market. This quota matches the volume imported before recent trade disputes over such imports. In 2024, Canada followed the US and imposed additional import tariffs of 100 per cent on electric vehicles from China, which brought sales of Chinese EVs in Canada to a virtual standstill.
However, this policy has now been partially reversed. The reversal is limited, as only 49,000 vehicles may be imported under the 6.1 per cent tariff. This volume represents less than three per cent of Canada’s new vehicle market. From the 49,001st import onwards, the 100 per cent tariff will be reinstated. The focus is expected to be on affordable models. According to the Prime Minister’s announcement, “with this agreement, it is also anticipated that, in five years, more than 50% of these vehicles will be affordable EVs with an import price of less than $35,000, creating new lower-cost options for Canadian consumers.” Currently, 35,000 Canadian dollars equate to approximately 21,700 euros.
Is China investing in raw materials for EVs in Canada?
Canadian officials state that the agreement is expected to trigger ‘agreement will drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing careers for Canadian workers, and ensure a robust build-out of Canada’s EV supply chain.’ The import of vehicles is thus designed to stimulate further investments in Canada—not only in the sale and maintenance of imported cars but also, as highlighted in the context of Canada’s EV supply chain, in production and raw material partnerships.
Canada is rich in raw materials and possesses green energy resources that enable clean production. For years, the governments in Ottawa and several Canadian provinces have sought investments in electromobility to retain not only raw material extraction but also further processing within the country. Until now, such partners have primarily come from the US, Europe, and other parts of Asia. Examples include the PowerCo battery factory currently under construction in St. Thomas, Ontario, a project by the VW Group, or the battery factory in Windsor, Ontario, a joint venture between Stellantis and LG Energy Solution.
The agreement also includes increased investments in solar, wind, and energy storage technologies. During his state visit to Beijing, the Canadian Prime Minister’s office stated: “In a more divided and uncertain world, Canada is building a stronger, more independent, and more resilient economy. To that end, Canada’s new government is working with urgency and determination to diversify our trade partnerships and catalyse massive new levels of investment. As the world’s second-largest economy, China presents enormous opportunities for Canada in this mission.”
In return, China has agreed to remove or reduce trade barriers and tariffs in the other direction—particularly in the agricultural sector. From 1 March, for example, the tariff on imports of Canadian rapeseed will be reduced to around 15 %—currently, it stands at 85%. Additionally, Canadian rapeseed meal, lobster, crabs, and peas are expected to be exempt from “the relevant anti-discrimination tariffs” until at least the end of this year.
Mark Carney stated: “At its best, the Canada-China relationship has created massive opportunities for both our peoples. By leveraging our strengths and focusing on trade, energy, agri-food, and areas where we can make huge gains, we are forging a new strategic partnership that builds on the best of our past, reflects the world as it is today, and benefits the people of both our nations.”
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