China and Canada Reach Electric Vehicle Tariff Agreement, Chinese Automakers Plan to Build Factories in Canada

China and Canada have recently reached a trade agreement to reduce tariffs on electric vehicles imported from China from 100% to 6.1%. The agreement allows a maximum of 49,000 Chinese-made electric vehicles to enter the Canadian market annually at this preferential rate, with at least half of the models required to be priced no higher than $35,000 by 2030. The arrangement has triggered a strong reaction from the United States, with then-President Donald Trump threatening to impose a 100% tariff on Canadian goods if the agreement takes effect. China emphasized that the agreement is a mutually beneficial arrangement rather than a zero-sum game.

Chinese Ambassador to Canada Wang Ding stated that China is encouraging its rapidly developing new energy vehicle (NEV) companies to invest and build factories in Canada to carry out localized production. In an interview with CTV News, he said, "All such projects are beneficial to the development of Canada's electric vehicle industry, contribute to Canadian job growth, and allow local consumers to obtain higher quality, more price-competitive vehicles." He pointed out that the essence of practical cooperation between China and Canada lies in complementarity and win-win results; China supports Chinese enterprises in investing and doing business in Canada in accordance with market rules, and at the same time hopes that Canada will provide a fair, non-discriminatory and predictable business environment for Chinese enterprises coming to Canada. Wang Ding emphasized that if Chinese enterprises choose to carry out investment, factory construction, or joint ventures with Canada, the relevant projects will be win-win outcomes.

Regarding the US policy orientation, Wang Di stated: "Unlike some countries, China not only considers its own interests but also does not pursue a 'win-lose' outcome."

Unifor President Lana Payne believes that the tariff adjustment could open a pathway for Chinese automakers to rapidly expand their market share in Canada. Ontario Premier Doug Ford also expressed similar concerns, pointing out that Canada might face a large influx of low-priced electric vehicles, while China has not made clear commitments regarding local investment.

Wenlan Jiang, head of the Canada-China Energy and Environment Forum, suggested that Canadian auto parts giant Magna International could partner with Chinese automakers to establish electric vehicle production bases within Canada. Previously, Magna confirmed a partnership with GAC Group to produce the Aion V model, though the vehicle will be manufactured at its Graz plant in Austria. "If this collaboration can be implemented in Austria, it is equally feasible in Ontario," Jiang stated. "By leveraging regional advantages and synergistic cooperation, both parties could potentially achieve even better results."

Under the terms of the agreement, the annual quota for Chinese-made electric vehicles eligible for the 6.1% preferential tariff is 49,000 units, with at least 50% of the models required to be priced no higher than $35,000 before 2030.