Canadian Prime Minister Mark Carney announced Friday that his country will slash its 100% import tax on Chinese electric vehicles to just 6.1%. This decision paves the way for companies like Geely, BYD, and Xiaomi to establish a second foothold in the North American automotive market.
Canada is not going all-in on Chinese EVs, however. The country will initially cap annual imports at 49,000 vehicles. According to reports, that cap will slowly increase to about 70,000 in around five years.
This is a major shift that comes at a time when China is looking to boost EV exports, especially as the European Union weighs lowering its own tariffs on the vehicles. The United States remains a holdout on that front, though this week President Trump said he would be open to Chinese automakers building factories in the U.S. that produce EVs.
China has already been exporting gas, hybrid, and electric vehicles to Mexico, with the latter especially booming in 2025. Many leading EV-makers in China have been agitating to enter the U.S. market. For instance, Geely held a drive event at the Consumer Electronics Show in Las Vegas last week. While showcasing models ostensibly meant for Mexico, a company executive implied the conglomerate aims to announce an entry into the U.S. market within the next two to three years.
Automotive journalists, influencers, and some executives like Ford CEO Jim Farley have praised the quality of Chinese EVs in recent years. But the 100% U.S. tariff on Chinese cars has so far made exporting them a non-starter. This is despite Chinese EVs being sold at far lower prices than the average car in the U.S., a feat achieved through a combination of low cost of capital, labor, and a willingness to burn money to gain market share.
China’s ability to undercut other automakers on price is just one concern. The U.S. has spent the last few years trying to separate itself from China’s EV supply chain for national security reasons, under both Presidents Biden and Trump. There are other legal hurdles, too. 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.
On Thursday, Avery Ash, the CEO of nonprofit Securing America’s Future Energy, cautioned against the idea of allowing Chinese automakers to build cars in the United States. He stated that such a strategy has backfired in Europe and would have potentially catastrophic impacts on the American automotive industry and national security. He urged the President to stay tough against China to protect American manufacturers and workers.