Lower tariffs and faster certification are expected to favor automakers that are already approved for North American sales.
On the Dash:
- Canada will allow up to 49,000 China-made EVs annually at a 6.1 percent tariff, replacing a previous 100 percent duty.
- Tesla, Volvo, and Polestar are positioned to benefit first because they already meet North American regulatory requirements.
- The move deepens the policy divide with the U.S., which continues to block Chinese EV imports with steep tariffs.
Tesla and Geely-controlled brands Volvo and Polestar are expected to be the first automakers to benefit from Canada’s decision to sharply reduce tariffs on electric vehicles made in China, a move that could reshape EV competition north of the U.S. border.
Under an agreement announced last week, Canada will allow up to 49,000 Chinese-made EVs to enter the country annually at a 6.1% tariff, replacing the previous 100% duty. The deal was reached alongside a separate concession involving Canadian canola exports. Canadian officials have indicated the quota could eventually rise to 70,000 vehicles within five years.
While the policy is designed to encourage longer-term investment from Chinese automakers, the immediate beneficiaries are manufacturers that already meet North American regulatory standards. That includes Tesla, which previously imported large volumes of vehicles from its Shanghai plant into Canada, as well as Volvo and Polestar, both owned by Zhejiang Geely Holding Group.
Tesla imported more than 44,000 vehicles into Canada in 2023 before the tariff hike forced the automaker to halt shipments from China in 2024. Since then, Tesla has relied on U.S. and Berlin production to supply the Canadian market. Analysts say the new agreement could allow Tesla to resume exports from Shanghai relatively quickly, particularly for models such as the Model 3, which is primarily produced in China.
Geely brands also stand to gain. Volvo and Polestar had previously shipped China-built vehicles to Canada and already have established sales and service networks in the country. Transport Canada is expected to accelerate certification for newly approved Chinese EVs, with approval timelines shortened to roughly eight weeks, according to officials familiar with the agreement.
At the luxury end of the market, Geely-owned Lotus said prices for its China-built Eletre SUV could fall by about 50% under the new tariff structure. The vehicle currently starts at about $225,600 ($313,500 CAD).
Chinese EV leader BYD currently has minimal passenger vehicle sales in Canada but could benefit from the deal over time. Half of the import quota will be reserved for vehicles priced at $25,189 or less ($35,000 CAD) by 2030, signaling Ottawa’s interest in expanding lower-cost EV options for consumers.
The agreement highlights a growing divergence between Canada and the United States on trade policy. The Trump administration continues to enforce 100% tariffs on Chinese EVs, effectively blocking them from the U.S. market. While Canada’s move opens the door to increased Chinese EV presence north of the border, U.S. officials have criticized the decision, citing concerns over state-backed overcapacity and unfair competition.
($1 = 1.3895 Canadian dollars)
