Made-in-China EVs Enter Canada Under Deal Carney Struck With Xi

Chinese-made electric vehicles are beginning to arrive in Canada under a new arrangement that Prime Minister Mark Carney agreed to in January during a visit with China’s President Xi Jinping.

The cars will be the first to be imported by Canada under a deal that allows as many as 49,000 Chinese EVs in a 12-month period at a tariff rate of around 6%. Prior to this year, Canada had a tariff of more than 100% on those products, effectively shutting them out.

In recent days, hundreds of Tesla Inc. cars made at the U.S. automaker’s Shanghai factory have started to show up under the new low-tariff regime, according to a person familiar with the matter, asking not to be identified because they are not authorized to speak publicly.

A vehicle carrier called Glovis Treasure with cargo including a small number of Chinese-made Lotus luxury brand cars has been moored outside the Port of Vancouver since Sunday. The ship departed Shanghai in early May, according to shipping data compiled by Bloomberg.

The Canada-China deal will be closely watched by U.S. automakers, which have historically held a dominating position in the Canadian market. Executives including General Motors Co. Chief Executive Officer Mary Barra have questioned the Carney government’s decision to ease barriers to Chinese electric cars.

U.S. policymakers, including President Donald Trump himself, have been sharply critical of Carney for cutting a deal with Xi on electric cars in return for a lowering of Chinese tariffs on Canadian agricultural products. Earlier this week, U.S. Representative Haley Stevens and Senator Elissa Slotkin—both from Michigan—announced a proposal to ban “Chinese connected vehicles” from entering the US. That would apply to drivers owning them in Canada, and in Mexico, where BYD and rivals have already gained significant market share.

Until recently, Canada’s policy on Chinese electric vehicles was similar to the U.S.—use high tariffs to keep them out, a stance which prompted retaliatory levies on Canadian farm goods from Beijing. But last year, President Trump imposed large tariffs on foreign autos, resulting in production declines and job losses at Canadian factories. Squeezed between both markets, Carney’s government reviewed its approach to the sector.

The quota of 49,000 cars represents less than 3% of the Canadian new-vehicle market, and it’s similar to the annual pace of Chinese-made EV imports—primarily Teslas—before October 2024, when then-Prime Minister Justin Trudeau imposed a 100% surtax.

However, the cap is set to rise year by year, and China’s domestic EV sector is surging, disrupting global auto markets. Canada’s government expects that the new trade arrangement will result in some Chinese-owned automakers entering the Canadian market for the first time. BYD Co. is planning some 20 sales locations with partners in Canada, according to an adviser to BYD who spoke with Bloomberg News last month.

Canadian officials have debated whether to divide up the Chinese EV quota, including whether to cap how much of it each company can use, so that the small allowance is not dominated by any particular manufacturer. Starting in 2027, a growing portion will be reserved for vehicles costing C$35,000 ($25,393) or less, reaching 50% in 2030.

During remarks at the Economic Club of New York on Thursday, Carney said that in the short term, it looks like most of the cars shipped under the quota will be Teslas. Over time there will be a broader range of lower cost cars coming in, “but in a controlled way,” he said.

Canada’s foreign affairs department, which administers the tariff quota, did not respond to a request for comment by publication time.

Lotus, which is owned by Zhejiang Geely Holding Group Co., posted a video of 18 Eletre cars rolling onto a ship on Chinese social network Weibo on May 7. The Lotus models start at C$119,900.

A caption reads: “Setting a new record for Chinese electric vehicle exports: From rolling off the production line at Lotus’s global smart factory to its successful export to Canada, showcasing the power of Chinese intelligent manufacturing to the world.”

Top photo: Workers on the assembly line at Chery Automobile Co. in Wuhu, Anhui Province, China. Bloomberg.