Carney Slashes Tariffs on Chinese EVs, Breaking With Bipartisan US Policy

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Prime Minister Mark Carney concluded his trip to China by announcing that Canada will pull back on its tariffs on Chinese electric vehicles, a move that breaks with U.S. policy.

Carney said that in “exchange for a small piece” of the Canadian car market, he expects that Chinese auto companies will make investments in Canada, including eventually building a factory here.

“That’s the plan,” he said in French when speaking to reporters in Beijing on Jan. 16.

The announcement comes as Canada seeks to expand ties with China in a bid to diversify non-U.S. exports and draw in new investments.

Carney said Canada is forging a “new partnership” with China. The Prime Minister’s Office (PMO) said that in order to fully realize that partnership, Ottawa is modifying the current duties placed on Chinese EVs.

As part of an agreement to remove trade barriers, the PMO said it expects China will slash its tariffs on Canadian agricultural and seafood products in the coming weeks. Those tariffs were imposed in March 2025 in retaliation for Canadian tariffs on Chinese EVs, steel, and aluminum.

Based on the agreement, Canada will remove its 100 percent surtax on up to 49,000 Chinese EVs per year, which will be tariffed under the “most-favoured-nation” tariff rate of 6.1 percent.

The number of Chinese EVs to be included in the tariff-rate quota will increase in the following years to reach about 70,000 after five years, Carney told reporters on Jan. 16.

Canada had placed the 100 percent tariff on Chinese EVs in late 2024, under the Liberal government of Prime Minister Justin Trudeau.

The move followed similar measures implemented by the Biden administration, which, like the Liberals, also intended to boost the domestic production of EVs and increase consumer uptake through incentives.

After U.S. President Donald Trump took office in January 2025, he stopped favouring EVs, letting federal subsidies expire. However, he has kept the 100 percent tariff on Chinese EVs.

While visiting a Ford Motor Company plant earlier this week, Trump said China is taking over the car market in Europe, whereas his tariffs have allowed U.S. manufacturers to thrive. The European Union maintains a level of duties on Chinese cars, but those have increasingly gained market shares in recent years.

“In Europe, China’s taking over the auto business,” Trump said on Jan. 13. “And here, what is it? We have 100 percent tariff on any car coming in from China, so that makes [U.S. carmakers] able to do very nicely against China.”

Carney has faced pressure from the Canadian auto industry and Ontario Premier Doug Ford, whose province is where most car plants are located, about the need to keep the tariffs on China in place.

Carney said, however, that the amount of Chinese EVs getting the low tariff rate is equivalent to only 3 percent of the car market.

“We’re returning to the levels of Chinese automobiles as a cap that we had two years ago,” he said.

As part of the deal, the PMO said it expects China will lower its tariffs on canola seed from around 85 percent to 15 percent starting March 1. Furthermore, Canada expects other Canadian goods such as canola meal, peas, crabs, and lobsters will no longer be subject to “anti-discrimination tariffs,” also starting on March 1. The PMO said this will be in place “until at least the end of this year.” There was no announcement about China’s 25 percent tariff on Canadian pork.

Ford said the deal was made without any guarantee or promise of immediate investments in Canada’s economy. He said that to “fix this mess,” Ottawa should move to support Ontario’s car industry by dropping the EV mandate and federal fees making the industry less competitive.

He said Carney’s agreement with China will “allow 50,000 EVs onto our streets jeopardizing our security and auto jobs. This follows him breaking his promise to ‘negotiate a win’ and get a deal with the U.S. by last July. ”

Poilievre also said Carney “must explain how he has gone from saying China was Canada’s ‘biggest security threat’ before the election to announcing a ’strategic partnership' with Beijing after the election.” During the 2025 election campaign, Carney had said that China is the number one security threat to Canada.

Meanwhile, Saskatchewan Premier Scott Moe, whose province has been severely impacted by Chinese tariffs on canola, welcomed the deal reached by Carney.

Carney’s break with the United States on Chinese EVs comes a few days after an editorial in a Chinese Communist Party media outlet said that Ottawa needs to distance itself from Washington if it wants closer ties with Beijing.

“If Ottawa still chooses to subject its China policy to the will of Washington again in the future, it will only render its previous efforts to mend ties with Beijing in vain.”

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