Ottawa told Washington about Chinese EV talks as Canada cuts tariffs to 6.1%
Canada informed the U.S. ahead of an agreement to reopen its market to Chinese electric vehicles, easing a 100% tariff to 6.1% and tying imports to potential Chinese investment in Canada.
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By Torontoer Staff
Canada informed the Trump administration about talks that led to a deal with China to reopen its market to Chinese electric vehicles, a move that helps explain the subdued U.S. reaction to the announcement. The agreement drops Canada’s 100 per cent tariff on Chinese-made EVs to 6.1 per cent and allows 49,000 imports this year.
Officials say the decision was finalised during Prime Minister Mark Carney’s bilateral meeting with President Xi Jinping in Beijing, after months of discussions. The arrangement also includes conditions tied to Chinese investment in Canada.
How Ottawa notified Washington
Kirsten Hillman, the outgoing Canadian ambassador to Washington, played a role in briefing U.S. officials, according to senior Canadian sources. One insider said Hillman "was aware" of the negotiations in the lead-up to the Carney-Xi meeting and that conversations took place with the Trump administration.
We didn’t take anybody by surprise but we needed to have a deal.
senior official
The information was kept on a close hold. U.S. Trade Representative Jamieson Greer was reportedly neutral when first told, until President Trump signalled his own stance. Sources would not say whether U.S. officials were briefed months earlier, immediately before the meeting, or only after the agreement was sealed.
What the agreement does
- Allows 49,000 Chinese-built electric vehicles to enter Canada in 2025 at a 6.1 per cent tariff, down from 100 per cent.
- Restores Canada’s most-favoured-nation tariff level that applied before the tariff hikes in 2024.
- Slight increase from roughly 45,000 imports in 2023, many of which were Tesla and Volvo models produced in China.
- Includes a longer-term expectation that Chinese carmakers will make substantial investments in Canada, such as joint ventures and use of Canadian labour.
Ottawa says the tariff rollback is conditional on Chinese manufacturers agreeing to invest in Canadian production and transfer expertise. The government’s objective is to build a domestic EV industry that can supply Canada and export to other markets.
Industry reaction and Ottawa’s strategy
Automakers with existing ties to China, including Tesla and Ford, are expected to be among the first to ship vehicles back into Canada. One official said Ford’s reaction to the announcement was "good," noting the company may now have a market opening in Canada that it does not have in the U.S.
Government sources describe the move as part of a broader auto strategy to be released in February, aimed at reshaping Canada’s industry around electrification and attracting foreign investment. An official characterised the effort as a way to "leapfrog the Americans" by becoming the first North American country to produce EVs with Chinese technology.
The only way to counter U.S. protectionism is if Europe and Asia and us create a new market for ourselves without too many tariffs.
senior official
Political context and trade fallout
Trade tensions between Canada and China erupted in 2024 after Ottawa matched U.S. tariff measures, imposing a 100 per cent tariff on Chinese-made EVs and 25 per cent duties on Chinese steel and aluminium. China retaliated with steep tariffs on Canadian agricultural exports, including canola, pork and seafood.
Under Friday’s deal most of those retaliatory tariffs were reduced to a combined level of around 15 per cent starting March 1, though China’s 25 per cent tariff on pork remains. Canada also secured the reinstatement of certification for Canadian pork establishments, officials said.
Carney framed the agreement as the start of a revised "strategic partnership" with China and set a target to raise exports to China by 50 per cent by 2030. Officials say the talks gathered momentum after Carney met Xi on the sidelines of the APEC summit in late October, which Xi called a "turnaround" in relations.
Nobody really in the world is leading that effort. What the Prime Minister did in China … is a first move of tectonic plates in the trade sector.
senior official
What comes next
The government will seek follow-up investments and joint ventures from Chinese carmakers while finalising its domestic auto plan. Officials acknowledge political work remains to bring provincial leaders and autoworkers on side, but expect the strategy can be explained and accepted over time.
The deal shifts Canada’s approach to trade in a sector defined by rapid electrification and geopolitical friction. Ottawa is betting that linking market access to domestic investment can both reopen trading lines with China and anchor a new, export-oriented EV industry in Canada.
tradeelectric-vehiclesCanada-Chinaauto-industrytariffs
