'Will Allow EVs From China': Carney Agrees To Capped Imports For Lower Tariff On Canadian Products

Last Updated:January 20, 2026, 07:14 IST

Canada will allow a capped number of Chinese electric vehicles into its market and cut tariffs in exchange for lower Chinese duties on key farm exports, PM Mark Carney has said.

Canada's Prime Minister Mark Carney, left, meets with Chinese President Xi Jinping (File photo/AP)

Canada will allow a limited number of Chinese electric vehicles into its domestic market and actively court Chinese joint-venture investments in its auto sector, Prime Minister Mark Carney announced, signalling a significant recalibration of Ottawa’s trade and industrial strategy amid strained relations with the United States.

In a post on X, Carney said his government was taking concrete steps to position Canada as a global hub for electric vehicle manufacturing.

“To make Canada a leader in electric vehicle manufacturing, we’re working to attract significant new joint-venture Chinese investments," he wrote.

As part of the transition, he added that Canada would permit a capped number of Chinese EVs into the country.

“And as our domestic sector builds up, we’ll allow a limited number of EVs from China into the Canadian market — less than 50,000 next year — providing more affordable, energy-efficient options for Canadians."

The policy shift follows a trade understanding reached during Carney’s visit to China, where Canada agreed to slash its 100 per cent tariff on Chinese electric vehicles to 6.1 per cent and introduce an initial annual cap of 49,000 vehicles.

According to Carney, the quota is expected to expand gradually, reaching roughly 70,000 vehicles over the next five years.

In return, China will reduce tariffs on major Canadian agricultural exports, including canola seeds, which Carney said will see duties fall from 84 per cent to about 15 per cent.

Tariffs on other products such as canola meal and certain seafood will also be eased, a move the Prime Minister said last week would unlock nearly $3 billion in export orders for Canadian farmers, fish harvesters and processors.

“Our relationship has progressed in recent months with China. It is more predictable, and you see results coming from that," Carney had told reporters after meetings with Chinese leaders.

The move represents a clear break from US policy, which continues to impose steep tariffs on Chinese electric vehicles.

While some members of the US administration have warned that Canada’s decision could be problematic in the long term, US President Donald Trump publicly welcomed the agreement.

“That’s what he should be doing, and it’s a good thing for him to sign a trade deal. If you can get a deal with China, you should do that," Trump said.

Carney acknowledged concerns from Canadian automakers and labour groups but argued that the limited quota was designed to allow a “smooth transition" while the domestic EV sector scales up.

He said the initial cap would account for only about 3 per cent of the roughly 1.8 million vehicles sold annually in Canada, and stressed that China is expected to begin investing in Canada’s auto industry within three years.

“We’re building a new part of our car industry, building cars of the future in partnership, bringing affordable autos for Canadians at a time when affordability is top of mind," he said, adding that the strategy aligns with Canada’s long-term goal of moving toward a net-zero emissions future.

During the visit, Carney also met Chinese President Xi Jinping, with both leaders pledging to stabilise and improve bilateral ties after years of tension.

Carney said stronger engagement with Beijing could help shore up a global trade system he described as being “under great strain," even as he stressed that Canada’s relationship with the United States remains deeper and broader.

The Prime Minister has framed the agreement as part of a broader effort to diversify Canada’s economic partnerships at a time of global trade disruption, while maintaining that engagement with China will remain limited and pragmatic, given differences between the two countries on a range of issues.

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