Canada’s new auto strategy is to trade limited market access for Chinese EV know-how and domestic production, aiming to seed joint ventures and investments within three years that can produce a Canadian electric vehicle using Chinese expertise.
The policy shift begins with a recent decision to allow up to 49,000 Chinese EVs per year into Canada at a 6.1% tariff, a sharp cut from the 100% tariff imposed in 2024, with Prime Minister Mark Carney framing the impact as a “tiny sliver” of the domestic market at about 3%.
A senior Canadian official said the objective is for Canada to become the first country in North America to build an EV “with Chinese knowledge,” and called it a fundamental error to assume President Donald Trump will block Chinese EVs from the American market.
Ottawa is also positioning the move as coordinated rather than a blindside. The same official said Washington had advance warning, with Canada’s ambassador to the US, Kirsten Hillman, tracking the Beijing talks and US Trade Representative Jamieson Greer kept informed after Carney and Chinese President Xi Jinping met.
Trump publicly praised the approach, saying “That’s what he should be doing. It’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that.”
Greer, by contrast, called the deal “problematic for Canada” in earlier remarks and argued US tariffs exist to protect American autoworkers from Chinese vehicles. US Transportation Secretary Sean Duffy added that Canada would regret bringing Chinese cars into its market.
A new federal auto policy expected in February will reserve more favorable access to Canada’s market for foreign automakers that manufacture vehicles in Canada, while import-only players would face “less beneficial” terms, with tariffs or restrictions cited as examples.
The same senior official described an onshore-assembly push designed to attract Chinese, Korean, or German automakers, echoing 1980s tactics used to entice Japanese manufacturers into Ontario, and noted that 70% of auto assembly in Canada is Japanese today.
Canada is also planning to enforce conditions before approving foreign assembly investments, including investment size, potential unionized workforce commitments, Canadian control of intellectual property, and thresholds for domestic technology inside plants.
EV in Canada
The urgency is tied to industrial exposure. The government is trying to grow a 125,000-worker auto industry as Trump imposes tariffs on Canadian-made passenger vehicles and insists the US does not need cars made in Canada, while also pressuring automakers to move operations into the US to avoid tariffs.
Ottawa has already escalated on enforcement. Industry Minister Mélanie Joly said the government would serve Stellantis a notice of default under funding contracts tied to Windsor and Brampton projects after Stellantis scrapped plans in October to build a Jeep model at Brampton and shifted production to the US. Further, Joly’s office said she met Chinese EV makers BYD and Chery during the China trip.
Labor and incumbent manufacturers are warning about near-term damage. Unifor said GM CAMI in Ingersoll and Stellantis in Brampton are idled, a shift is being eliminated at GM Oshawa, and job losses are rippling through the parts supply chain, while the Canadian Vehicle Manufacturers’ Association argued the move complicates efforts to remove US tariffs on Canadian exports and to navigate the 2026 USMCA review.
BYD’s Canadian footprint is already tangible in transit, with a 45,000-square-foot Newmarket, Ontario facility assembling five battery-electric buses for Quebec’s Réseau de Transport de Longueuil, a system with 30 million+ annual ridership, and BYD reporting 220,000 employees globally and nearly 1,000 in North America.
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