Beijing-Ottawa deal reinforces China’s dominance in EV industry, analysts say

Beijing and Ottawa reached a “landmark” trade agreement last week, slashing tariffs on Chinese electric vehicles, in a move analysts said further cements China’s dominance and suggests the US decline in the global EV market.

The deal will open Canada up to Chinese EVs, signalling a thaw in diplomatic relations and a major break from the US. The bilateral partnership marks a shift in direction for Canada’s automotive industry, coming during a month that saw China’s BYD topple Tesla as the world’s top-selling EV maker.

“It is expected that within three years, this agreement will drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new auto manufacturing careers for Canadian workers and ensure a robust buildout of Canada’s EV supply chain,” the Canadian government said in a statement.

Relations between Canada and the US have frayed since President Donald Trump’s return to office, when he imposed tariffs on Canadian goods, including steel and timber, marking a shift in the dynamics between the two formerly close allies.

Canadian Prime Minister Mark Carney has taken a tougher stance against the US than other countries, opening the door to stronger ties with China after years of strained relations.

Last week’s agreement was announced after Carney travelled to Beijing to meet with Chinese President Xi Jinping. Canada agreed to remove the additional 100 per cent tariff on Chinese-made EVs that were imposed in 2024, following a similar move by the US. In response, China is lowering tariffs on Canadian canola.