Canada will allow 49,000 Chinese EVs annually under new reduced tariff agreement
BYD evaluates Canada entry as part of global push
Deal may lead to investment and EV production partnerships with a Chinese automaker in Canada.
Canada’s decision to lower import tariffs on Chinese EVs could pave the way for Chinese automakers like BYD to enter the Canadian market, as Beijing signals interest in long-term industrial partnerships with Canadian firms.
Under a new bilateral agreement signed this month, Canada will allow up to 49,000 Chinese electric vehicles to enter the country annually at a reduced tariff of 6.1%. The deal, signed by Prime Minister Mark Carney and Chinese President Xi Jinping, requires that at least half of the imported EVs be priced below $35,000 by 2030.
In return, China has agreed to ease tariffs on Canadian agricultural exports. Chinese Ambassador Wang Di described the trade deal as a first step toward deeper bilateral cooperation, calling it beneficial for both Canadian consumers and autoworkers.
Wang added that China encourages its automakers to invest directly in Canada, whether through factories, joint ventures, or other partnerships, provided they operate under fair market conditions. A senior Canadian government official said Ottawa views the arrangement as part of a larger strategy to localize EV production in Canada over time.
China’s largest electric vehicle manufacturer, BYD, is among the firms evaluating the Canadian market for a second time following the policy change. A BYD spokesperson confirmed the company is assessing the opportunity internally.
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BYD has significantly ramped up its international expansion in recent years. After selling more than 1.05 million vehicles outside China in 2025, the company expects overseas sales to rise by 24% to 1.3 million units in 2026. Europe will account for roughly one-third of those sales.
To support growth in Europe, BYD plans to begin production at a new plant in Szeged, Hungary by March or April 2026, with an annual capacity of 150,000 vehicles. It is also evaluating a second European plant site, with Spain and Germany under consideration, and is constructing a third in Turkey.
While BYD does not yet sell passenger EVs in Canada or the United States, it remains active in Mexico, which imported more than 625,000 China-made vehicles in 2025 despite new 50% tariffs. Company executives say rising foreign demand is key to offsetting declining domestic sales, which have been hit by overcapacity, pricing pressure, and consumer concerns about winter battery performance.
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In contrast to Europe, North American governments have been slower to embrace Chinese EV imports due to geopolitical and industrial concerns. Canadian union leaders and policy analysts have expressed skepticism about the recent trade agreement.
Unifor President Lana Payne criticized the deal as a “self-inflicted wound,” warning that China could quickly overtake domestic automakers as it has in other regions. Meanwhile, analysts including Margaret McCuaig-Johnston from the China Strategic Risks Institute cautioned that China’s EV sector is built on state subsidies and poses potential surveillance risks through vehicle software integration.
Still, others see potential for productive engagement. Wenran Jiang, head of the Canada-China Energy and Environment Forum, pointed to auto parts supplier Magna International’s partnership with a Chinese automaker to build cars in Austria as a model Canada could emulate.
Source: Automotive News
