Canada and China have announced a new trade agreement that will allow Chinese electric vehicles to enter the Canadian market for the first time in years, showing a change in North American trade policy. The deal will permit up to 49,000 Chinese-made electric vehicles to be imported into Canada each year under a reduced tariff rate, opening the door to more affordable EV options for Canadian consumers.
The announcement was made by Canadian Prime Minister Mark Carney during a visit to Beijing, where he described the agreement as a new “strategic partnership” between the two countries. According to Canadian officials, the deal will support Canada’s clean energy goals while also strengthening trade ties and attracting foreign investment into the country’s automotive sector.
For the past two years, Canada had closely followed the United States in restricting Chinese electric vehicles. After Washington imposed 100 percent tariffs on Chinese EVs, Canada introduced similar surtaxes, effectively blocking companies such as BYD, Nio, and Zeekr from selling their vehicles in the Canadian market. That policy stance has now changed.
Under the new agreement, Chinese electric vehicles imported within the annual quota will be subject to a Most Favored Nation tariff rate of 6.1 percent. The additional 100 percent supplementary tax will no longer apply within the quota. The Prime Minister’s Office said the 49,000-vehicle limit represents less than three percent of Canada’s annual new vehicle market, helping control market impact while allowing new competition.
Government officials emphasized that the deal is focused on affordability. Canada expects that within five years, more than half of the imported Chinese electric vehicles will be priced below 35,000 Canadian dollars at the import level. This could bring lower-cost models, including compact city cars, to Canadian roads as early as this year.
Electric vehicle prices remain a major barrier for many Canadian households. While interest in clean transportation is growing, high costs and limited options have slowed adoption. Officials believe the agreement will help close that gap by offering more choices at lower prices.
The agreement also includes major concessions from China on Canadian exports. As part of the deal, China has agreed to reduce tariffs on Canadian canola seed from around 85 percent to 15 percent. Restrictions on Canadian lobster and crab exports will also be lifted. Canadian officials say these measures will provide immediate relief to farmers and seafood exporters who have faced trade disruptions in recent years.
“This agreement is not just about vehicles,” the Prime Minister’s Office said in a statement. “It is about restoring balance in our trade relationship and supporting Canadian industries that depend on access to global markets.”
Beyond imports and exports, Canada expects the deal to attract new Chinese investment. The agreement states that it is expected to “drive considerable new Chinese joint-venture investment in Canada” within three years. This could include electric vehicle assembly, battery production, and supply chain development inside Canada.
Industry analysts say the joint-venture language is particularly important. It suggests Canada is using limited market access as an incentive for Chinese companies to invest locally, create jobs, and share technology with Canadian partners. Similar strategies have been used successfully in other global markets.
China welcomed Canada’s decision. An official from China’s Ministry of Commerce said the move was “a positive step taken by Canada in the right direction” and called it good news for Chinese electric vehicle companies seeking to enter the Canadian market. The official added that vehicles within the quota would enjoy the lower tariff rate and confirmed that the quota amount would increase gradually each year.
“We hope the Canadian side will actively fulfill its commitments and continue to work with China in the same direction,” the official said. “Through friendly consultations, we should create a fairer, more stable, and non-discriminatory environment for further expanding trade and investment cooperation in the EV sector.”
