Boosting bilateral trade, Canada and China have struck a new trade deal, cutting tariffs on China-made electric vehicles in exchange for reduced duties on Canadian exports.
Canada and China have reached a new trade agreement to reduce tariffs on China-built electric vehicles (EVs) in exchange for lower duties on a range of Canadian exports. The deal, announced by Prime Minister Mark Carney’s office, comes after Carney’s visit to China in the second week of January 2026.
Under the terms of the agreement, Canada will allow up to 49,000 China-made EVs to enter the country annually at a most-favoured-nation tariff rate of 6.1%, a significant reduction from the 100% tariff imposed in 2024.
The agreement also requires that more than 50% of these imported EVs be affordable models priced at CAD $35,000 or less within five years. This move comes at a time when the United States (US) has imposed steep tariffs on China-made EVs, creating a stark contrast in trade policies between the two nations.
The new trade arrangement is expected to boost the Chinese electric vehicle sector in Canada, with the 49,000-vehicle quota representing less than 3% of the country’s annual new-vehicle market. Canada plans to work with Chinese original equipment manufacturers (OEMs) to ensure that imported EVs meet Canadian motor vehicle safety standards.
In return, Canada anticipates increased Chinese investment in the Canadian auto industry, particularly in the electric vehicle supply chain, including batteries, wind, solar, and energy storage. The agreement will also extend tariff relief on certain steel and aluminium imports from China until the end of 2026.
With China being Canada’s second-largest trading partner, the agreement aims to increase Canadian exports to China by 50% by 2030. Both countries will review the deal’s progress in three years, with further discussions expected on additional trade issues.
