In what appears to be a major geopolitical shift, Mark Carney's government is reportedly preparing to abolish the 100-percent tariffs on Chinese electric vehicles (EVs). According to sources, the announcement could coincide with the Prime Minister's meeting with President Xi Jinping at the APEC summit this week. In return, Beijing would lift import restrictions on Canadian canola and pork.
While this decision aims to boost agricultural trade and offer affordable EVs to Canadians, it is seen in Windsor, Oshawa, and Oakville as a stab in the back. It exposes an already faltering industry to potentially fatal competition.
The Canadian industry caught in a vise
For the Canadian assembly plants operated by Ford, General Motors (GM) and Stellantis, this development could not come at a worse time. American automakers assembling vehicles in Canada are already caught in a vise between their main market and their production base.
To the south: American protectionism
The Canadian plants of the Big Three depend heavily on exporting products to the U.S. under the current CUSMA agreement. However, relations are icy with the Trump administration, which has ended trade talks and constantly threatens to impose new tariffs on vehicles assembled in Canada, which the president sees as competition.
To the east: Chinese competition
Until now, the Canadian domestic market was a safe haven from Chinese competition, protected by the 100-percent tariffs. Abolishing those duties would open the door wide to giants like BYD, Nio and XPeng, known for their advanced technology and aggressive, government-subsidized low prices.
Political schizophrenia
According to the unions, this decision from Ottawa—which, we repeat, is still not confirmed—would defy all industrial logic. Unifor, which represents auto workers, has called it economic treason. The union is decrying the potential waste of billions of tax dollars spent to help Ford in Oakville, Stellantis in Windsor, and GM in Oshawa convert to electric, only to then have the government allow subsidized Chinese EVs to flood the domestic market.
Indeed, Canada has bet its entire strategy on positioning those plants as hubs for the North American EV supply chain. By opening the domestic market in this way, Ottawa risks sawing off the branch on which sits billions of invested dollars.
Consumers, the only winners?
In this geopolitical game, the Canadian consumer seems to be the only winner, at least in the short term.
The EV market in Canada has slowed since the Carney government suspended the federal incentive program (iZEV) in the spring of 2025, citing budgetary pressures.
The arrival of low-cost Chinese EVs would solve the accessibility problem for many potential buyers. Ironically, the first beneficiary could be Tesla, which could flood the market with Model 3 and Y made more cheaply in China.
But for consumers who are also auto workers, the calculation is grimmer. The gain of cheaper EVs could come at the cost of thousands of well-paid manufacturing jobs. Canada would find itself importing all of its vehicles rather than building any of them here - exactly what the industrial strategy of the last five years aimed to prevent.