Chinese EV Giants Head to Canada Under New Tariff Agreement

A major shift is underway in the North American automotive landscape as Chinese electric vehicle manufacturers expand into Canada, following a landmark trade agreement signed in January 2026 during Canadian Prime Minister Mark Carney's visit to China.

Eighteen Geely-owned Lotus Eletre luxury hyper-SUVs, which were produced in Wuhan, have set sail from Shanghai. Simultaneously, Chery is planning to open its first 10 localized dealerships before the end of June. BYD is also advancing vehicle certifications and plans to establish 20 sales outlets across Canada by 2026.

BYD has placed its Seagull, Dolphin, Atto 3, and Seal models onto the official pre-examination list. Chery applied for trademarks including Exeed, Omoda, Jaecoo, iCar, Lepas, and Luxeed, while actively recruiting local engineering and management teams. Geely's premium Zeekr brand also initiated executive recruitment in Toronto in April.

The accord grants Chinese-manufactured electrified vehicles an annual import quota of 49,000 units, scaling to 70,000 units within five years, at a tariff of just 6.1 percent, ending the prohibitive 106 percent tariff imposed since 2024. In return, China lowered tariffs on Canadian agricultural products.

The quota year runs from March to February. The first phase, which is from March to August this year, offers up to 24,500 units on a first-come, first-served basis, while the second phase, which starts from September to next February, allocates another 24,500 units plus any carryover.

Canadian authorities have also instituted an affordable model mandate for vehicles priced under US$25,600. The final rules published in March state that this requirement will take effect in 2027 at 10 percent, rising to 20 percent in 2028, 35 percent in 2029, and 50 percent by 2030.

The large-scale arrival of Chinese EVs will reshape the North American market, forcing local manufacturers to adjust strategies.

Furthermore, as a core member of the United States-Mexico-Canada Agreement, Canada's actions will draw close scrutiny from the US. If Chinese EVs capture a substantial market share or establish regional assembly networks, it could trigger intense trade friction and potential renegotiations of free trade rules.