Jan 28, 2026
Prime Minister Mark Carney recently unveiled a big shift in Canada’s trade policy. He visited Beijing to firm up a “strategic partnership” with China that included a dramatic change to tariffs on electric vehicles (EVs), as the federal government seeks to diversify trade options. The shift in strategy was prompted by an increasingly fraught relationship with the Trump administration.
The deal with China lowers tariffs on Chinese-built EVs from 100% to 6.1% and will allow 49,000 Chinese EVs to be imported into Canada each year. That number may rise going forward. In turn, China will reduce its own tariffs on Canadian exports; this includes canola, whose tariff rate will fall from 85% to 15% by March 2026 (1).
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A lot has been written about the geopolitical ramifications of Canada’s “pivot” to China. But here’s what it means for Canadians looking to buy an EV.
Why Carney went to China
Carney’s trip to China didn’t come out of nowhere. It reflects a growing belief in Ottawa that Canada’s dependence on the U.S. has become a vulnerability. The U.S. is Canada’s largest trading partner by a large margin, but its trade policy has grown unpredictable.
Amid threats both real and perceived from the U.S. president — including repeated comments about making Canada the “51st state” and calling Carney “Governor” — the federal government decided it needed to diversify Canada’s export markets. The U.S. is currently the destination for around 70% of Canada’s exports (2).
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The state of Canada’s EV market
Canada’s EV market has been deeply affected by U.S. trade policy. In 2024, Justin Trudeau’s Liberal government imposed a tariff of 100% on Chinese-made EVs, copying U.S. tariffs in order to be aligned with Canada’s biggest trading partner (3).
Canada’s EV market has not performed well recently. Big monthly drops in EV sales were reported throughout 2025. In March, for example, sales of zero-emission vehicles (ZEV) nosedived, plunging 44% compared with the same month a year earlier (4).
Data shows that the share of EVs in the Canadian auto market fell from 18% in 2024 to under 10% by the middle of 2025. This was partly caused by reductions in government rebates (5).
EV brands in Canada: U.S. vs. Chinese
Sales of American brand Tesla, the most recognizable name in electric vehicles, have slowed recently. Some estimates say that Tesla’s Canadian sales have fallen 60% in 2025 compared to a year earlier (6). The decline has been attributed to a mix of policy decisions by the Canadian government and a public backlash against Tesla’s high-profile founder Elon Musk.
Chinese EV brands are basically invisible in Canada, with near zero market share. This is mostly the result of the high Canadian tariffs on Chinese EVs. However, a small number of Chinese EVs will now be allowed into Canada each year at a low tariff rate. For now, this amounts to about two percent of all vehicles sold in Canada. But it still implies that consumers should eventually see more affordable EV options. Analysts say some of these vehicles could retail for under $35,000 within five years.
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So what should Canadians do?
The Canada-China deal could put downward pressure on EV prices, which would likely be a boon for cash-strapped consumers who may feel they’ve been priced out of the market. However, potential vehicle buyers should have realistic expectations.
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First of all, the initial quota for low-tariff imports is tiny relative to Canada’s overall auto market. This means that noticeable price competition is unlikely to occur immediately.
Second, if you are considering buying an EV, you should look at the total cost of owning one, including all the charging infrastructure. For example, installing a home Level 2 EV charger can cost thousands of dollars depending what kind of electrical work is required. Depending where you live in Canada, charging your EV at home could cost between $2.00 to $4.00 per 100 km. Public charging is often twice as expensive, and can be three times as much for fast charging.
Government incentives can help defray some of these costs. While some rebate programs have been paused, others have been relaunched. Rebates for EV chargers can also reduce ownership expenses.
Takeaway
Carney’s pivot to China is a significant shift in Canada’s trade policy. It moves away from copying U.S. tariff policy and embarks on a more independent path. This opens the door for more competition from a wider array of global brands in some consumer markets, including that for EVs. This could mean more choices for consumers and potentially lower prices.
But the changes won’t happen overnight. Any impact on prices of EVs will likely be gradual. Canadians looking to buy an EV should stay informed of market developments, shop smart and educate themselves on the costs involved in owning an EV.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Prime Minister's Office (1); Government of Canada (2); Car Scoops (3); Statistics Canada (4); Lark Scientific (5); Motor Illustrated (6)
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Grant Surridge is a finance-focused editor and writer with more than two decades of experience. His work and bylines span a range of international outlets and institutions, including the National Post, Reuters, Microsoft’s MSN.ca, and Samsung Securities.
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