BYD vehicles in the production line at the company's new factory in Bahia, Brazil. The company is one of four Chinese automakers considering investments in Canada.Rafael Martins/Reuters
Canada remains on track to expand its low-tariff Chinese electric vehicle imports over the next five years, Industry Minister Mélanie Joly said Monday after a visit to Shanghai and Beijing.
That’s despite U.S. talk of Mexico and Canada increasingly aligning external tariffs against countries such as China – a hot topic in negotiations to renew the United States-Mexico-Canada Agreement.
Prime Minister Mark Carney broke with the United States and reached a deal with China in January to scale back 100-per-cent tariffs on Chinese-made electric vehicles in return for Beijing sharply reducing retaliatory levies on canola products and other agricultural shipments from Canada. In 2026, Mr. Carney pledged to allow in 49,000 Chinese-made EVs at a tariff rate of about 6 per cent – a quota that will increase annually by 6.5 per cent.
Ms. Joly spent much of last week in China where she met with four Chinese companies in an effort to attract investment to Canada’s auto sector. The four companies – BYD, Chery, Geely and Shanghai Launch Automotive Technology – have been examining possible investments in Canada.
She also met with Chinese Vice-President Han Zheng.
Industry Minister Mélanie Joly, shown in Ottawa on June 9, was in China last week to meet with four Chinese automakers.Justin Tang/The Canadian Press
Speaking to reporters Monday, Ms. Joly said Canada remains committed to expanding low-tariff access for Chinese vehicles under the deal. By 2031, the quota will permit about 67,000 Chinese-made EVs into the country.
“This is already set, and this was communicated back in January, so no surprises,” Ms. Joly said.
Asked how Canada would resolve increased Chinese EV imports with U.S. interest in aligning external tariffs among the three USMCA countries, Ms. Joly said Canada’s trade negotiators would protect this country’s interests. And, she said, the deal ensures greater market access for Canadian exports.
“The agreement was clear and set within the January, 2026, terms, and so in there it was clear that our fishers, our agricultural producers had access in a better way to the Chinese market.”
She said the only way for Chinese automakers to obtain access to Canada is through the quota import system or through a joint venture with a Canadian company that respects rules that she’s laid out.
Opinion: If Canada Auto can’t survive, let it fade away. Courting China is not the solution
In late May, U.S. Trade Representative Jamieson Greer told reporters that USMCA would include a focus on external tariff co-ordination, with the goal of reducing the amount of Chinese products entering U.S. supply chains through Canada and Mexico. He suggested co-operation on this would lead to lower tariffs for Canadian and Mexican products.
“My sense, though, is if we can come to good terms with Mexico and others in the region on external tariffs, it makes it easier to give preferential treatment to folks in the region,” Mr. Greer said then.
He had previously cited Chinese-made vehicles as problematic for Washington. “If the Mexicans and the Canadians want to have preferential access into the U.S. market, they need to make sure that they’re controlling their own economic borders. And that includes with respect to subsidized autos coming from China or anywhere else, for that matter. We are focused on this,” Mr. Greer told the U.S. House Ways and Means committee in April.
Back in 2024, Canada and the U.S. acted in concert to impose 100-per-cent tariffs on Chinese electric vehicles, saying these products were subsidized by Beijing and overproduced in a deliberate effort to swamp global markets.
Ms. Joly said all four Chinese EV makers she met with in China are willing to explore joint ventures in Canada in order to manufacture vehicles in this country. She said her four previously announced conditions for Chinese EV manufacturing investment in Canada remain unchanged. Under those conditions, any investment must be a joint venture that is majority Canadian-owned and adheres to Canadian labour standards. The vehicles must use Canadian parts, and their software must be secure and safeguard users’ data.
She noted that Chinese automaker Chery is partnering with Nissan in a deal that could see the Japanese company build EVs in Britain. Similarly, Chery is teaming up with another company in Spain to produce there, as well as in South Africa under a separate venture, she said.
Chinese carmaker Chery eyes expansion into the Canadian EV market
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said the Canadian-China EV deal comes up regularly in conversations with U.S. industry and government.
“I certainly have had to spend a lot of time explaining the China deal to my American counterparts and American officials” he said.
“The government’s going to have to reconcile what Washington wants with what we agreed with in Beijing.”
He said he doesn’t think Mr. Carney made the EV deal for its own merits.
“In fairness to the Prime Minister, he didn’t make the deal because he thought it was a good automotive deal. He made the deal because he thought it was required to balance other interests of Canada,” Mr. Volpe said, referring to the agriculture and seafood tariff cuts made by China in response to the EV agreement.
Mr. Carney seemed to acknowledge U.S. concerns last week at the G7 meeting in Évian, France, when an open microphone picked up parts of his conversation with U.S. President Donald Trump regarding the Canada-China EV deal. He was heard saying “less than 3 per cent of our market, 49,000 cars,” an apparent reference to how many Chinese EVs are being admitted to Canada at the low tariff rate for the first year. The Prime Minister also made a hand motion as he was heard telling Mr. Trump: “It’s a cap, we capped, a hard line,” an apparent reference to the quota.
Mr. Trump responded: “That’s good. I like it.”
It’s not known whether Mr. Carney told Mr. Trump the quota for Chinese EVs increases every year by 6.5 per cent.
Vina Nadjibulla, vice-president of research and strategy at the Asia Pacific Foundation of Canada, said Canadians should not assume Chinese vehicle makers are making their own decisions, independent of Beijing’s Communist Party-controlled government, on how to enter this country’s market.
“We shouldn’t be naive,” she said. “In the case of China, the government plays a critical role, and we cannot assume that these are market-driven private sector conversations.”
Ms. Nadjibulla also said it’s worth considering whether there is an economic case for China to build cars in Canada given Washington has signalled its antipathy toward Chinese-made vehicles. She said foreign auto makers normally build in Canada with an eye to exporting to the United States.
“So far the U.S. has made it very clear that they don’t want to see Chinese EVs in the U.S., and they’re going to actually tighten rules of origin for the auto sector.”