Canada eases tariffs on limited number of China-made electric vehicles
The Canadian government, led by Prime Minister Mark Carney, has issued the first import permits under the recently negotiated EV deal with China. Between 1 March and 31 August this year, it will issue up to 24,500 permits, allowing car manufacturers to import their electric vehicles at a tariff of just 6.1% instead of 106.1%. The allocation will follow a ‘first-come, first-served’ principle, as stated by the responsible authority, Global Affairs Canada.
There is no fixed upper limit on permits per manufacturer. However, the Ministry of Foreign Affairs said it will monitor the allocation to ensure fair access. A second application window is planned from 1 September 2026 to 28 February 2027, allowing another 24,500 vehicles – plus any unused permits from the first phase – to enter under the reduced tariff.
49,000 Units in one year
In January, China and Canada reached a fundamental agreement to allow the import of up to 49,000 Chinese electric vehicles into the Canadian market at a tariff rate of 6.1% within one year. The two quotas of 24,500 units each correspond exactly to this agreed volume. The 49,000 units are not a randomly determined figure; they match the volume from the year before the recent trade conflicts over these imports. In 2024, Canada followed the US and imposed additional import tariffs of 100% on electric vehicles from China, which brought sales of Chinese EVs in Canada to a virtual standstill.
This marks a partial reversal of the previous policy. However, the number of vehicles eligible for the reduced 6.1 per cent tariff is strictly capped: the 49,000 units allowed represent less than three per cent of Canada’s annual new car market. From the 49,001st vehicle onwards, the 100 per cent special import tariff will apply again. The quota is set to increase gradually, reaching 70,000 units by 2030. The regulation applies to battery-electric vehicles, hybrid vehicles and plug-in hybrids imported from China.
Canada is likely focusing on affordable models. “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,” the Prime Minister’s office stated in January. 35,000 Canadian dollars currently equate to approximately 22,100 euros or 25,600 US dollars.
Chinese firms invest in Canada’s EV raw materials sector
According to Canadian officials, the ‘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 intended to drive further investments in Canada—not only in the sale and maintenance of imported cars but also, given the reference to Canada’s EV supply chain, in production and raw material deals.
Canada is rich in raw materials and has access to green energy to enable clean production. For years, the governments in Ottawa and several Canadian provinces have sought investments in electric mobility 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), part of the VW Group, or the battery factory in Windsor (also Ontario), a joint venture between Stellantis and LG Energy Solution.
The agreement also includes increased investments in solar, wind, and energy storage technologies. “In a more divided and uncertain world, Canada is building a stronger, more independent, and more resilient economy,” stated the Canadian Prime Minister’s office during his state visit to Beijing. “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 is expected 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%. Canadian rapeseed meal, lobster, crabs, and peas ‘will not be subject to relevant anti-discrimination tariffs from March 1, 2026, until at least the end of this year.’
“IAt its best, the Canada-China relationship has created massive opportunities for both our peoples,” Carney said in January. “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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