06:31 18-04-2026

Canada's trade deal with Chinese EV makers: tariffs, localization, and US concerns

Canada allows up to 49,000 Chinese EVs per year at 6.1% tariffs, pushing for local components amid US warnings. BYD and others eye North American entry.

Canada is stepping up its collaboration with Chinese automakers. International Trade Minister Maninder Sidhu recently held talks in Guangzhou with BYD, Xpeng, and GAC, focusing on bringing Chinese electric vehicles to the Canadian market under a new trade agreement.

A key element of the deal is a quota system: up to 49,000 Chinese EVs per year can now be imported into Canada at a reduced tariff of just 6.1%, down from the previous 100%. This forms part of a broader bilateral agreement that includes mutual trade concessions.

Canadian authorities are pushing for localization, meaning the use of local components and labor could become a mandatory condition for investments. This creates tension with BYD's preferred approach, which involves maintaining full control over its operations without local partners.

Adding to the pressure is the position of the United States. Washington has already warned Canada about potential trade measures if the country becomes a conduit for Chinese EV exports to the American market.

The agreement opens a pathway for Chinese brands to enter North America through Canada. BYD is already considering building its own factory, while Stellantis is exploring the option of assembling Chinese models in Ontario.

Canada is trying to balance attracting investment with geopolitical risks. If the project moves forward, the North American EV market could gain a powerful new player in the form of Chinese brands.