Canada is seeking to collaborate with Chinese firms in joint ventures and investments over the next three years to develop a Canadian electric vehicle with Chinese expertise, as per a senior Canadian official. The objective is for Canada to lead North America in manufacturing this type of electric vehicle.
The official, who requested anonymity, emphasized that assuming U.S. President Donald Trump would prohibit Chinese electric vehicles from entering the United States is a misconception. Canada informed the Trump administration in advance of its decision to permit up to 49,000 Chinese EVs into the Canadian market annually at a reduced 6.1 per cent tariff, down from the previously imposed 100 per cent tariff in 2024.
According to the official, Canada’s Ambassador to the U.S., Kirsten Hillman, was involved in discussions with Beijing. Following a meeting between Prime Minister Mark Carney and Chinese President Xi Jinping, Hillman ensured that U.S. Trade Representative Jamieson Greer was informed. The official noted that the American response was neutral.
The official clarified that Canada’s divergence from matching American tariffs on Chinese EVs did not catch the U.S. off guard. President Trump praised Carney’s decision, stating that signing a trade deal with China was the right move. However, some officials in Washington expressed concerns. Greer described the deal as “problematic for Canada,” citing reasons related to tariffs protecting American autoworkers.
U.S. Transportation Secretary Sean Duffy anticipated that Canada might regret the decision to introduce Chinese cars into its market. The federal government is developing an auto policy set to be unveiled in February, aimed at bolstering Canada’s auto industry and potentially surpassing the U.S.
Trump has emphasized that the U.S. does not rely on cars manufactured in Canada and has imposed tariffs on Canadian-made vehicles. He has also urged auto manufacturers to relocate operations to the U.S. Last month, Industry Minister Mélanie Joly announced plans to serve Stellantis, a major automotive company, with a notice of default under funding contracts linked to projects in Windsor and Brampton, Ontario. This action followed Stellantis’ decision to shift production from its Brampton plant to the U.S.
The official mentioned that the government intends to offer preferential treatment to foreign automakers producing vehicles in Canada over those importing cars assembled abroad. Foreign automakers not manufacturing vehicles in Canada will face less advantageous terms, the official added.
Carney highlighted that the agreement with China would enhance affordability for some EVs in Canada, representing a small fraction of the domestic market at approximately three percent.