OTTAWA (Realist English). Canada and China have reached what officials described as a “landmark” trade agreement that sharply reduces tariffs on Chinese electric vehicles, a move analysts say further consolidates China’s dominance in the global EV market and highlights the relative decline of the United States in the sector.
The deal opens the Canadian market to Chinese-made EVs, signalling a thaw in relations between Ottawa and Beijing and a notable break from Canada’s traditional alignment with Washington. The agreement comes as China’s BYD recently overtook Tesla to become the world’s largest electric vehicle manufacturer by sales.
“It is expected that within three years, this agreement will drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing careers for Canadian workers and ensure a robust buildout of Canada’s EV supply chain,” the Canadian government said in a statement.
The agreement reflects a broader shift in Canada’s foreign and trade policy as relations with the United States have deteriorated since Donald Trump returned to office and imposed tariffs on Canadian exports, including steel and timber. Those measures strained ties between the two long-standing allies.
Canadian Prime Minister Mark Carney has taken a tougher stance toward Washington than many US partners, creating space for closer engagement with Beijing after years of strained relations.
The deal was announced following Carney’s visit to Beijing, where he met Chinese President Xi Jinping. Under the agreement, Canada will scrap the additional 100% tariff on Chinese-made EVs introduced in 2024, a measure originally adopted in step with US policy. In return, China will reduce tariffs on Canadian canola exports.
Analysts say the move marks a strategic turning point for Canada’s automotive industry, aligning it more closely with the world’s largest EV producer at a time of rapid transformation in the global car market.