Prime Minister of Canada Mark Carney was announced On Friday that his country will cut the 100% import tax on Chinese electric vehicles to just 6.1%, paving the way for companies such as Geely, BYD, Xiaomi and others to establish a second place in the North American auto market.
Canada isn’t going all-in on Chinese EVs, though. The country will initially limit annual imports to 49,000 vehicles. This cap will slowly increase to about 70,000 in about five years, according to the Associated Press.
It’s a major change that comes as China seeks to boost EV exports, especially as the European Union weighs reducing its own tariffs on vehicles. The US remains on that front, although this week President Trump said he would be open to Chinese automakers building factories in the US that produce EVs.
China already exports natural gas, hybrid and electric vehicles to Mexico, with the latter particularly flourishing in 2025. Many of China’s leading electric vehicle makers are racing to enter the US market, including Geely, which held an event at the Consumer Electronics Show in Las Vegas last week. While the company was showcasing a range of models ostensibly intended for the Mexican market, one of its communications executives hinted that the conglomerate aims to announce participation in the US in the next two to three years.
Auto journalists, influencers and even some executives – most notably Ford CEO Jim Farley – have praised the quality of Chinese electric vehicles in recent years.
However, the 100% tariff on Chinese cars has so far made the idea of exporting them to the US a non-starter. This is despite the fact that Chinese EVs sell for far less than the average car in the US – a feat usually achieved through a combination of extremely low capital, labor costs and a willingness to burn money to gain market share.
China’s ability to undercut other automakers’ prices is just one concern. The US has spent the past few years trying to disassociate itself from China’s EV supply chain on national security grounds under Presidents Biden and Trump. There are other legal hurdles. Last year, the U.S. Department of Commerce’s Bureau of Industry and Security issued a rule restricting the import and sale of certain connected vehicles and related hardware and software linked to China or Russia.
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On Thursday, Avery Ash, CEO of the nonprofit Securing America’s Future Energy, warned against Trump’s idea of allowing Chinese automakers to build cars in the United States.
“We’ve seen this strategy fail in Europe and elsewhere — it would have potentially devastating effects on our auto industry, ripple effects across our entire defense industrial base, and make every American less safe,” he said in a statement. “We urge the President to stay tough on China and protect American auto manufacturers and workers.”
