TL;DR
Canada cut Chinese EV tariffs to 6.1% with a 49,000-unit annual cap. Nearly 400 dealers have applied to sell BYD, Geely, and Chery.
Michael MacGillivray, the CEO of Century Auto Group and Sigma Auto Group, oversees 10 dealerships across Nova Scotia and New Brunswick. In April, he flew to the Beijing Auto Show to shake hands with Chinese automakers and drive their cars. He came back impressed. “They have materials that are second to none,” he told CNBC. “Their styling is impressive. The ride is very impressive.” MacGillivray is now working to become one of the first Canadian dealers to sell imported Chinese EVs.
He is not alone. Farid Ahmad, CEO of DSMA, an auto dealership broker in suburban Toronto, says his firm has received nearly 400 inquiries from dealers across Canada wanting to represent Chinese brands including BYD, Geely, and Chery. “I think from their perspective it gives them a foothold in the North American market,” Ahmad said.
The catalyst is a trade deal struck in January between Canadian Prime Minister Mark Carney and Chinese President Xi Jinping. Canada slashed its tariff on Chinese-made EVs from 100% to 6.1%, the country’s most-favoured-nation rate, for the first 49,000 vehicles imported annually. Anything beyond the cap is still subject to the 100% surtax imposed in October 2024. In exchange, China agreed to reduce tariffs on Canadian canola from 85% to approximately 15%, and to lift anti-discrimination tariffs on Canadian rapeseed meal, lobsters, crabs, and peas.
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The quota operates on a March-to-February year, split into two six-month periods of 24,500 permits each, allocated first-come-first-served by the Canada Border Services Agency. The 49,000-unit cap represents less than 3% of Canada’s annual new vehicle market, which topped 1.9 million sales last year. The quota is set to rise to 70,000 vehicles by 2030, and the Canadian government aims for at least 50% of imports within the quota to be affordable models priced below C$35,000 (approximately US$26,000) within five years.
The first Chinese cars have already landed. Chery has shipped vehicles from its Jaecoo, Omoda, and Exelantis sub-brands, and Geely-owned Lotus delivered 18 Eletre electric SUVs, reportedly the first Chinese-made vehicles to arrive under the new trade framework. The Lotus Eletre’s Canadian price dropped by roughly 50% after the tariff reduction. BYD has registered vehicles manufactured in Shenzhen and Xi’an with Transport Canada. A BYD Seagull that costs C$12,000 ex-factory could arrive in Canada for roughly C$14,000 after the 6.1% tariff and shipping, potentially retailing at C$20,000 to C$25,000, a price point that would be transformative for a sub-C$30,000 EV segment that currently does not exist in Canada.
The political response has been sharp. The Canadian Vehicle Manufacturers’ Association, representing GM, Ford, and Stellantis, called the decision “deeply concerning,” arguing that Chinese state subsidies undercut domestic competitors and that connected vehicle hardware poses security risks. Ontario Premier Doug Ford called the imported vehicles “spy vehicles.” In the US, more than 120 House lawmakers signed a letter urging President Trump to keep Chinese automakers out entirely, and bipartisan legislation introduced on 12 May would ban the importation of connected vehicles and components linked to China.
Trump himself called Canada’s move “a disaster.” US Transportation Secretary Sean Duffy posted on X that “Canada will live to regret the day they let the Chinese Communist Party flood North America with their EVs.” But Trump’s own position has been inconsistent: days after the criticism, he said at a White House event that Carney was doing the right thing in signing a trade deal with China, and has separately indicated interest in allowing Chinese automakers to build factories on American soil.
Chinese EV content is already flooding American TikTok and YouTube, driving consumer demand for vehicles that cannot be legally sold in the US. Canada’s decision to open a regulated entry point means that North Americans can now drive to a Canadian dealership and experience a BYD or Chery in person, even if they cannot buy one at home. The geographic proximity adds pressure to a US policy that relies on a 100% tariff wall to keep Chinese vehicles out of a market where the average new car now costs more than $49,000.
Michael Robinet, vice president of forecast strategy at S&P Global Mobility, described the Canadian approach as cautious. “Anywhere between 3% to 5% of the market is sizable but, nonetheless, not something that will change the competitive dynamic significantly,” he said. But the deal is designed to escalate: the quota rises to 70,000 by 2030, Chinese automakers must establish joint ventures in Canada within three years, and the affordability requirements tighten over time.
BYD overtook Tesla to become the world’s largest EV seller in 2025, moving 2.26 million battery electric vehicles against Tesla’s 1.64 million. Europe has already absorbed significant Chinese EV market share, and BYD is in talks to take over Stellantis plants on the continent to expand production. Mexico’s Chinese EV market share reached roughly 19% in 2025 before the country raised tariffs to 50%. Canada is now the latest market to allow controlled entry, and the conditions it has attached, affordability requirements, joint venture mandates, and a capped quota, represent a different model from the tariff walls the US has erected or the open-market exposure that overwhelmed Mexico.
The question is whether 49,000 vehicles is a threshold or a beachhead. Canadian Unifor, the autoworkers’ union, warned that “once domestic manufacturing capacity is lost, it cannot be easily rebuilt.” Canadian consumers on the street told CNBC they were eager. “I think they will destroy the market in a good way,” said Patrick Hunt. The first retail deliveries are expected in late Q2 or Q3 2026, concentrated in Quebec and British Columbia, where EV adoption is highest. By then, the 24,500 first-half permits may already be the binding constraint, not regulatory uncertainty.
For Chinese automakers, Canada is the first door into North America. For Canadian consumers, it is the first chance to buy an EV for less than C$25,000. For the US auto industry, it is a demonstration, happening 100 kilometres from the border, of what a regulated opening looks like. Whether it remains a controlled experiment or becomes the template for a broader North American shift depends on what happens next in Washington, and on whether the cars are as good as the dealers who drove them in Beijing say they are.
