Canada Sharply Reduces Tariffs on Chinese Electric Vehicles
A new trade agreement between Canada and China has caused significant resonance. It provides for a sharp reduction in customs duties on electric vehicles from China from 100 percent to just 6.1 percent. This decision has provoked a sharp reaction from the United States, where President Donald Trump is threatening to impose 100-percent tariffs on Canadian goods in response if the agreement comes into force. However, the Chinese side insists that the deal must be mutually beneficial.
The agreement allows the import of up to 49 thousand Chinese electric vehicles into Canada at a reduced tariff, provided that at least half of them will cost no more than $35,000 by 2030.
Concerns of Canadian Unions and Authorities
Unifor union president Lana Payne expressed the opinion that this agreement paves the way for China to quickly capture a significant share of a critically important market. Ontario Premier Doug Ford also shares these concerns, warning that Canada could be flooded with cheap electric vehicles without any firm commitments from China to invest in the local economy.
China’s Intentions to Build Plants in Canada
Despite criticism, Chinese Ambassador to Canada Wang Di stated that Chinese automakers are encouraged to invest directly in Canada and establish local car production.
All these projects will be beneficial for the development of the Canadian electric vehicle industry, will contribute to employment growth in Canada, and will help Canadian consumers buy higher-quality and more affordable cars. The nature of practical cooperation between China and Canada is complementarity and mutual benefit.
He added that China calls on the Canadian side to provide a fair, non-discriminatory, and predictable business environment for Chinese companies entering the market. According to the ambassador, this is what Beijing ultimately wants to achieve, and any such projects, such as opening plants or creating joint ventures with Canadian partners, will be truly mutually beneficial.
Political Subtext of the Agreement
The Chinese ambassador’s comments can be seen as a hint at the US administration. Wang Di noted that, unlike some other countries, China will not consider only its own selfish interests and does not seek a situation where only one side wins.
Potential for Cooperation with Canadian Companies
The head of the Canada-China Energy and Environment Forum, Wenran Jiang, expressed the opinion that it would be appropriate to see a partnership between the Canadian giant Magna International and a Chinese automaker to build electric vehicles in Canada. He noted that if Magna is already building the Aion V model for GAC in Austria, a similar arrangement could be organized in Ontario, leveraging regional advantages.
This trade agreement significantly changes the landscape of the North American automotive market, introducing new powerful players. On one hand, it could accelerate transport electrification in Canada through more affordable models, and on the other, it creates challenges for local manufacturers and workers. The future will show whether plans for production localization, which could mitigate economic risks and political tension, especially in relations with the southern neighbor, will be realized. The success of the agreement will depend on how transparent and balanced the real investments and technology transfer will be.