Canada is preparing for a significant influx of electric vehicles (EVs) from China, following a recent adjustment to import tariffs. The federal government announced earlier this month it will allow up to 49,000 Chinese EVs into the country annually at a tariff rate of 6.1 per cent, a substantial reduction from the 100 per cent tariff implemented in October 2024 in response to pressure from the United States. This move is expected to lower prices and increase the availability of EVs for Canadian consumers, but also raises questions about the country’s readiness to handle the increased demand on its charging infrastructure and power grid.
Prior to the 100 per cent tariff, the rate stood at 6.1 per cent. The recent agreement, brokered during Prime Minister Mark Carney’s visit to Beijing, also includes concessions from China, with reduced tariffs on Canadian exports such as canola seeds, peas, lobsters, and crabs. The government anticipates that over half of the imported EVs from China will be priced under $35,000 within five years, a price point that could appeal to consumers currently priced out of the new EV market, where the average new car cost in Canada is $63,665.
The potential impact on the Canadian automotive industry has drawn criticism from industry and labour leaders, as well as Ontario Premier Doug Ford, who fear that cheaper Chinese EVs will undercut domestic production and lead to job losses. However, some analysts suggest the immediate threat is limited. According to a recent opinion piece, a few EV models from China are unlikely to significantly disrupt the Canadian automotive landscape in the short to medium term.
Experts studying the EV transition in Canada believe the anticipated number of Chinese EVs requires context. While acknowledging potential strains on existing infrastructure, they generally agree that Canada’s charging network and power grid can accommodate the increased demand, provided strategic investments are made to address existing gaps. The TD Economics report from September 2025 highlights the opportunity for Canada to diversify its EV supply chains through strategic partnerships with Chinese automakers and battery manufacturers, potentially accelerating innovation and reducing production costs.
The influx of Chinese EVs comes at a time when EV sales in Canada have slowed. The Canadian government had initially set a target for zero-emission vehicles to comprise 20 per cent of light-duty vehicle sales by , increasing to 60 per cent by and 100 per cent by . However, Prime Minister Carney recently suspended the target due to the slowdown in sales during , making the original goal unattainable.
The TD Economics report suggests that more affordable and diverse EV offerings, like those potentially coming from China, could help reverse this trend, particularly given lingering consumer concerns about high EV prices and the availability of charging infrastructure. The report also notes that American and European automakers are already engaging in partnerships with Chinese companies, and Canada has a competitive advantage with its end-to-end supply chain.
The Canadian government’s decision to lower tariffs on Chinese EVs is part of a broader strategy to decarbonize the transportation sector and reduce overall emissions. However, the move also highlights the complex interplay between trade policy, domestic industry concerns, and the global shift towards electric vehicles. The success of this strategy will depend on Canada’s ability to proactively address infrastructure challenges, foster innovation within its automotive industry, and navigate the evolving dynamics of the international EV market.
Joint ventures between Canadian and Chinese automakers are also being explored as a means of attracting investment, and expertise. This approach could allow Canada to benefit from China’s advancements in EV technology and manufacturing while mitigating some of the risks associated with increased competition. The long-term implications of this shift remain to be seen, but the Canadian EV landscape is poised for significant change in the coming years.
In August 2024, the Canadian government initiated consultations on potential policy responses to what it deems unfair Chinese trade practices in the EV sector, acknowledging the need to protect domestic industries while embracing the opportunities presented by the global EV transition. This balancing act will be crucial as Canada navigates the challenges and opportunities presented by the increasing presence of Chinese EVs in its market.
