- As part of a new wide-ranging trade agreement between Canada and China, Canada has agreed a tariff quota that will allow up to 49,000 Chinese-built EVs to be imported into the country every year at a significantly reduced tariff rate.
- The move could open up the Canadian car market to receive electric cars from brands such as BYD, XPENG, NIO, and more.
- It puts Canada on a completely different path to the USA, where Chinese-built EVs are hit with a 100% import tax.
Canada drops its 100% tariff on Chinese EVs
Before this new strategic partnership, Canada had imposed a 100% import tax against Chinese-built EVs, much in the same form as the neighbouring USA. Under the new proposed deal, however, a tariff quota arrangement will allow such vehicles to be imported into the country with a much less restrictive tariff. Every year, Canada will allow up to 49,000 Chinese EVs to enter the country at a import rate of only 6.1%.
Any Chinese EV imported after the first 49,000 examples within a year will still be subject to the original 100% tariff. However, considering the current size of the Canadian EV market, this will still bring significant availability of Chinese EVs to the Canadian market. Canada themselves anticipate that five years after this deal goes live, around 50% of the EVs imported under the scheme will have an import price below $35,000 – allowing Canadians to benefit from affordable electric cars.
It remains to be seen which Chinese brands will start exploring Canadian market entries on the back of this announcement. BYD is a likely entrant, however, as the firm had existing plans to enter the country before Canada implemented its 100% tariff back in 2024.
It’s not just Chinese manufacturers that could benefit from this new arrangement, but any manufacturer that produces EVs in China. Tesla’s Shanghai Gigafactory in China, for example, exports models all over the world. But, recently that didn’t include the North American market, due to the prohibitive 100% tariff. Under these changes, Tesla could theoretically import Chinese-built Teslas to Canada at a 6.1% import rate – provided, of course, those are included within the first 49,000 examples imported within a year.
