The Prime Minister's Office has confirmed that Canadian PM Mark Carney will visit China next week, from January 13 to 17, before heading to Davos. While Ottawa presents this trip as a move toward trade diversification, the auto industry has more pragmatic questions: In an uncertain North American context, can this trip reduce supply chain pressure and electrification costs? And are those 100-percent tariffs on imported Chinese EVs on the table?
Why now? The auto industry at a crossroads
Although the trip is billed as focusing on "trade and cooperation," the auto industry is concerned because it relies on inputs that are highly sensitive to tariffs, such as parts, batteries and critical minerals. In 2024, Canada imposed a 100-percent surtax on Chinese EVs. Beijing retaliated with agricultural tariffs, illustrating how trade tensions can quickly spread to the wider economy — indirectly impacting demand and the automotive investment climate.
Canada–USA–China: A delicate balancing act
The Canadian automotive industry is highly vulnerable to changes in U.S. policy due to its deep integration with the American market. Ottawa must walk a fine line as it looks to diversify its partners while reassuring Washington that Canada will not serve as a "backdoor" for Chinese products entering North America.
China: The industrial hub of electrification
Beyond the consumer market, China remains the dominant player in the EV value chain (battery cells, active materials). That raises two major issues for Canada:
- - EV costs and prices: Access to competitive inputs directly influences manufacturing costs and, ultimately, the price tag at the dealership.
- - Investment certainty: Securing battery factory projects requires predictability regarding the supply of raw materials, which are often sourced in Asia.
What to expect: Gradual results
According to Reuters and the Associated Press, the goal of Carney's visit is to reestablish a functional working relationship. For the automotive sector, any benefits, such as the resumption of technical channels and clarification on tariff positions, will likely be gradual. Beijing has suggested that adjustments to its own measures could depend on Canada's stance on the EV surtax — a complex issue given the pressure from Washington.
Signs to watch for
To gauge the concrete impact following the visit, three elements deserve attention:
- - Specific sector references (e.g., battery materials, energy);
- - The language used regarding a possible "review" of tariffs (EVs, steel, and aluminum);
- - Reactions in Ontario: If the provincial government, manufacturers, or unions respond, this will be the most reliable indicator of the impact on local employment and assembly.