Canada is planning to explore partnerships and investments with Chinese firms over the next three years to develop an electric vehicle in Canada utilizing Chinese expertise, as per a high-ranking Canadian official. The objective is for Canada to lead North America in manufacturing this kind of electric vehicle, the official shared under anonymity.
The official emphasized that assuming U.S. President Donald Trump would block Chinese electric vehicles from entering the United States is a misconception. Furthermore, Canada informed the Trump administration in advance of its decision to reduce tariffs from 100% to 6.1% on up to 49,000 Chinese electric vehicles entering the Canadian market yearly.
Canada’s ambassador to the U.S., Kirsten Hillman, was briefed on the discussions with Beijing, ensuring that U.S. Trade Representative Jamieson Greer was informed after a meeting between Prime Minister Mark Carney and Chinese President Xi Jinping. The U.S. response was reportedly neutral.
The U.S. was not caught off guard by Canada’s actions, the official noted. While President Trump supported Carney’s decision, other Washington officials expressed concerns. Greer mentioned that the deal poses challenges for Canada, emphasizing the importance of American tariffs in protecting the domestic auto industry.
Transportation Secretary Sean Duffy expressed apprehension that Canada might regret allowing Chinese vehicles into its market. The Canadian government is developing an auto policy set for release in February to bolster the country’s auto sector workforce and potentially surpass the U.S. industry.
President Trump has asserted that the U.S. does not rely on Canadian-made cars and has imposed tariffs on Canadian passenger vehicles. He has encouraged auto manufacturers to relocate operations to the U.S. Last month, Industry Minister Mélanie Joly announced that the government would serve Stellantis with a notice of default concerning projects in Windsor and Brampton, Ontario.
The Canadian government plans to offer favorable treatment to foreign automakers producing vehicles in Canada over those importing cars from overseas. Automakers not manufacturing in Canada will face less advantageous terms. Carney highlighted that the deal with China would lower EV prices for Canadians, impacting a small portion of the domestic market at around three percent.