Canada is exploring the possibility of collaborating with Chinese companies over the next three years to develop an electric vehicle (EV) using Chinese expertise, as revealed by a senior Canadian official. The objective is for Canada to become the pioneer in North America to produce such an EV.
The official emphasized the misconception that U.S. President Donald Trump would block Chinese EVs from entering the American market. Canada informed the Trump administration in advance of its recent decision to permit up to 49,000 Chinese EVs annually into the Canadian market at a reduced tariff of 6.1%, down from the previous 100% tariff imposed in 2024.
Canada’s ambassador to the U.S., Kirsten Hillman, played a key role in coordinating discussions with Beijing. Following a meeting between Prime Minister Mark Carney and Chinese President Xi Jinping, Hillman ensured that U.S. Trade Representative Jamieson Greer was kept informed, with a neutral American response noted.
The U.S. was not caught off guard by Canada’s actions regarding tariffs on Chinese EVs, with President Trump expressing support for Carney’s decision. However, other officials in Washington, including Greer, viewed the deal as problematic for Canada.
The U.S. Transportation Secretary, Sean Duffy, predicted that Canada might regret allowing Chinese cars into its market. Despite this, the Canadian government is preparing to unveil an auto policy in February aimed at boosting the country’s auto industry workforce and potentially surpassing the U.S.
President Trump has emphasized that the U.S. does not rely on Canadian-made vehicles and has imposed tariffs on Canadian-made cars. He has also encouraged automakers to relocate production to the U.S. to avoid tariffs.
In a separate development, Industry Minister Mélanie Joly announced that the Canadian government would take action against automotive giant Stellantis for breaching contracts related to projects in Ontario. This comes after Stellantis decided to shift production from its Brampton plant to the U.S.
Moreover, Canada plans to offer favorable conditions to foreign automakers producing vehicles within the country, contrasting with less advantageous terms for those importing cars assembled abroad. Prime Minister Carney highlighted that the Chinese EV deal would enhance affordability for Canadians and represent a small portion of the domestic market, approximately three percent.
