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Canada wants to look at joint ventures and investments with Chinese companies within the next three years to build a Canadian electric vehicle with Chinese knowledge, according to a senior Canadian official.
The official, who spoke on the condition they not be named, said the goal is for Canada to become the first country in North America to build this type of EV.
It’s a fundamental error, the official said, to think that U.S. President Donald Trump will not allow Chinese electric vehicles into the United States.
The official also said that Canada kept the Trump administration in the loop and gave it advance warning of its decision on Friday to allow up to 49,000 Chinese EVs into the Canadian market each year at a 6.1 per cent tariff — down from a 100 per cent tariff imposed in 2024.
Canada’s ambassador to the U.S., Kirsten Hillman, was aware of the conversations with Beijing, the official said, adding that once Prime Minister Mark Carney and Chinese President Xi Jinping met, Hillman made sure that U.S. Trade Representative Jamieson Greer was aware. The official said the American reaction was neutral.
Prime Minister Mark Carney says Canada has reached a deal with China to allow tens of thousands of Chinese electric vehicles into the country at a lower tariff rate in exchange for lower duties on canola, lobsters, crabs and peas.
Canada didn’t take the U.S. by surprise, the official said. When asked about Canada detouring from matching American tariffs on Chinese EVs, Trump said Carney was doing the right thing.
“That’s what he should be doing. It’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that,” the U.S. president said.
But other officials in Washington sounded more concerned. According to Greer, the deal is “problematic for Canada.”
“There’s a reason why we don’t sell a lot of Chinese cars in the United States. It’s because we have tariffs to protect American autoworkers and Americans from those vehicles,” he told CNBC on Friday morning.
U.S. Transportation Secretary Sean Duffy said he thought Canada would look back at this deal and regret bringing Chinese cars into the market.
The federal government is working on an auto policy, expected to be released in February, that it hopes could help grow Canada’s 125,000-worker auto industry and eventually “leapfrog” over the U.S.
Ontario Premier Doug Ford says he did not hear from Prime Minister Mark Carney about the electric vehicle arrangement with China before it was announced, adding ‘this was not thought out properly.’
Trump has insisted the U.S. does not need cars made in Canada, and he has hit this country’s auto sector with tariffs on Canadian-made passenger vehicles. The U.S. president has also pushed auto manufacturers to move operations to the United States to avoid tariffs.
Last month, Industry Minister Mélanie Joly said the government would serve automotive giant Stellantis with a notice of default under funding contracts related to projects in Windsor and Brampton, Ont.
The move came after Stellantis revealed last October it was scrapping plans to build a Jeep model at its Brampton plant and move production to the U.S.
The government is also planning to give preferential access to foreign automakers that manufacture vehicles in Canada compared with those who import cars assembled abroad, the official said.
Foreign automakers that won’t manufacture vehicles in Canada will be subject to terms that aren’t as beneficial, the official said.
On Friday, Carney said the deal with China will make some EVs more affordable for Canadians and that it would amount to just a tiny sliver of the Canadian domestic market — about three per cent.
