- Canada will allow up to 49,000 Chinese EVs into its market at a most-favored-nation tariff rate of 6.1%.
- This volume represents the import level from the year before the recent trade friction began, accounting for less than 3% of Canada's new vehicle market sales.
Canada and China have reached an electric vehicle (EV) and canola tariff quota agreement, opening a window for Chinese EVs to expand into the North American market.
The Canadian government announced in a statement on Friday that it has reached an agreement with China to allow tens of thousands of Chinese EVs into Canada in exchange for reduced canola tariffs.
Canadian Prime Minister Mark Carney is currently visiting Beijing. This is one of the key outcomes of his trip and the first such trade agreement secured since he took office.
Canada will permit up to 49,000 Chinese EVs to enter its market at a most-favored-nation tariff rate of 6.1%.
This volume matches imports from the year preceding recent trade tensions (2023-2024) and represents less than 3% of Canada's new vehicle market sales.
The agreement is expected to spur considerable Chinese companies to establish joint ventures with trusted Canadian partners within three years, the statement noted.
In five years, over 50% of these vehicles are projected to be affordable EVs priced below $35,000, creating more low-cost options for Canadian consumers, according to the statement.
In exchange, China will reduce tariffs on Canadian canola.
Canada anticipates that by March 1, 2026, China will reduce tariffs on Canadian canola to about 15%, a significant decrease from the current combined rate of around 85%. China represents a $4 billion market for Canadian canola producers.
Canada anticipates that starting March 1, 2026, Canadian-produced canola meal, lobsters, crabs, and peas will be exempt from related anti-discrimination tariffs at least through the end of this year.
These outcomes will collectively help Canadian workers and businesses unlock nearly $3 billion in export orders, enabling them to fully tap into the vast potential of the Chinese market, the Canadian government said.
Canada imposed a 100% additional tariff on all EVs manufactured in China starting October 1, 2024, following the US government's move at the time.
Prior to the additional tariff, EVs produced in China faced a 6.1% tariff when exported to Canada.
After the additional tariff took effect, their rate rose to 106.1%. This effectively amounts to Canada closing its market to Chinese EV manufacturers.
