Canada is also supposedly ready to lift its 100% tariff on electric vehicles (EVs) imported into the country, which would change the EV landscape in North America. This is at a time when Prime Minister Mark Carney would hold meetings with the Chinese President Xi Jinping at the next Asia-Pacific Economic Cooperation (APEC) summit in South Korea later this week.
Such a ruling would be a significant shift in Canadian trade policy and would leave the hard-line attitude of the United States towards Chinese-made EVs.
Background: Canada’s Dark History on Tariffs
Canada in October 2024 followed the U.S. example and levied a 100% tariff on Chinese-made EVs, in an effort to save local manufacturers. But this action was swiftly met with criticism among the Canadian consumers and trade specialists who claimed that the action was disproportionate towards the U.S. automakers at the expense of Canadian competitiveness and low-cost EVs.
Since that time, the hostilities between the U.S. and Canada regarding trade have grown, especially following the stoppage of EV incentives by Washington and the issue of new barriers on Canadian exports. As bilateral talks are not bearing much fruit, Ottawa seems to be seeking new trade horizons with Beijing.
Trade-Off EVs of Canola and Pork
Other sources claim that the proposed tariff rollback may become a part of a larger trade agreement between Canada and China. China can step up and lift the tariffs imposed on Chinese EVs. In return, in the negotiation, Canada can lift the long-standing limits on Canadian canola and pork imports, which are the areas that have been severely affected by the previous trade wars.
With a successful deal, agricultural exports to one of the largest trading partners in Canada would be revived as well, and competitive EV choices would be brought back to Canadian consumers.
Winners and Losers
Tesla might be one of the largest benefactors in the short term. The tariffs have already caused the company to export Model Y to Canada, which is in Germany, while many of its cheaper models are made in Shanghai. By lifting the tariff, Tesla would be able to restart cheaper imports, which would have the potential to lower the prices to the Canadian consumers.
In the long run, the elimination may create a dam bursting of many Chinese car makers like BYD, NIO, and Xpeng to enter the Canadian market. These brands will provide high-quality and technology-oriented cars that are already popular in Europe and Asia.
Formal Accreditation Still to be Granted
Although there is increasing speculation, the Canadian government has yet to make an official statement. The majority of reports indicate the development is under consideration, whereby the final details may be announced after the Carney-Xi meeting in APEC.
Analysts warn that the timing is favorable, but the scope of the rollback, either complete elimination or a partial cut, is not yet clear. There might still be domestic political factors and lobbying by the industry that might impact the outcome.
Implications on Consumers and Trade Relations
Tariff elimination would also help reduce the prices of EVs and expand the number of models to a point where affordability is no longer a major obstacle to owning one among Canadian consumers. To farmers, a fresh agricultural access to China would be a huge win following the years of trade censorship.
Geopolitically, the action is an indication that Canada is refining its trade policy to strike a balance between the U.S. and China in terms of ensuring there is greater independence in the major sectors of the economy and meeting domestic demands.
