Canada has dramatically reversed its protectionist stance on Chinese electric vehicles (EVs), cutting tariffs from 100% to just 6.1% following a trade agreement signed between Prime Minister Mark Carney and Chinese President Xi Jinping in Beijing.
The agreement establishes a controlled quota system that will initially permit 49,000 Chinese-made EVs to enter Canada annually at the reduced tariff rate, representing approximately 2.5% of Canada’s total vehicle market. This cap will gradually increase to 70,000 vehicles by 2031.
A key condition requires that by 2030, half of these imports must be “affordable EVs” priced below C$35,000 (approximately US$25,000). The average fully electric vehicle in Canada currently costs around C$67,000, making this a potentially transformative shift for consumer affordability.
In exchange for this access, China has agreed to reduce tariffs on Canadian agricultural products, particularly canola seeds, which will drop from 85% to approximately 15% by March 2026.
Chinese brands eye Canadian entry
While no specific manufacturers have publicly confirmed Canadian launch plans, several Chinese brands are considered frontrunners for market entry.
BYD stands out as the most likely first entrant. As the world’s largest EV manufacturer, BYD already operates in dozens of international markets and has the logistics infrastructure to navigate regulatory compliance. The company met with Canadian Industry Minister Mélanie Joly during Carney’s Beijing trip.
Chery also met with Joly and appears closest to making a move, with reports suggesting the company is positioning itself to sell EVs in Canada. As China’s number one vehicle exporter with operations in 47 countries, Chery has significant international experience.
Other candidates include Geely, which has a potential shortcut through its ownership of Volvo and Polestar, both of which have established Canadian dealer networks. Nio, Zeekr, SAIC’s MG brand, Xiaomi, and other Chinese manufacturers are also considered potential entrants.
Prime Minister Carney stated that his government has had “direct conversations” with Chinese companies showing “explicit interest and intention to partner with Canadian companies.” The federal government anticipates these discussions will drive “considerable new Chinese joint-venture investment in Canada” within three years.
Regulatory hurdles remain
The most optimistic projections suggest Chinese EVs could reach Canadian showrooms as early as March or April 2026, though regulatory compliance will likely extend this timeline.
Chinese manufacturers face two main pathways to Canadian market entry: case-by-case approvals through Transport Canada’s existing frameworks for small initial batches, or volume imports requiring either the reopening of passenger vehicle intake for Chinese manufacturers or the creation of new compliance pathways.
Chinese manufacturers must also adapt vehicles to meet Canadian safety, environmental, and technical standards, including winter performance requirements and connectivity regulations – processes that typically take several months to complete.
Political opposition emerges
The deal has sparked significant opposition, particularly from Ontario Premier Doug Ford and Unifor union president Lana Payne, who have described it as a threat to Canadian auto manufacturing jobs and a potential barrier to accessing the crucial US market.
However, supporters argue the policy addresses Canada’s struggling EV adoption rates, which declined 27% in 2025 after federal incentive programmes lapsed, by introducing affordable options that could stimulate broader market growth.
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