The Canadian government has begun issuing permits allowing a limited number of electric vehicles from China to enter the domestic market at a sharply reduced tariff, marking a partial easing of restrictions introduced during recent trade tensions.
Between March 1 and August 31, Canada will permit up to 24,500 electric vehicles imported from China to be sold with a tariff of 6.1%, instead of the previously imposed 106.1% duty. The permits are being allocated on a first-come, first-served basis by Global Affairs Canada.
The policy forms part of a broader agreement reached earlier this year between Canada and China that allows up to 49,000 Chinese electric vehicles to enter the Canadian market at the lower tariff rate within a one-year period.
The two quotas of 24,500 vehicles correspond to the annual cap agreed by both governments. Once the quota is reached, any additional vehicles imported from China will again face the full 100% special tariff imposed in 2024.
The restriction means the vehicles covered by the agreement will represent less than three percent of Canada’s annual new-car market.
The reduced tariff scheme will also reopen another application window from September 1, 2026 to February 28, 2027, allowing an additional 24,500 vehicles—plus any unused permits from the first phase—to enter under the same conditions.
Canada originally imposed the steep tariffs in 2024 following similar measures by the United States, which effectively halted Chinese electric vehicle sales in the country. The new arrangement therefore represents a partial reversal of that policy while maintaining strict volume limits.
Officials say the policy is partly intended to expand access to lower-cost electric vehicles for Canadian consumers.
“With this agreement, it is also anticipated that, in five years, more than 50% of these vehicles will be affordable EVs with an import price of less than $35,000, creating new lower-cost options for Canadian consumers,” the office of Mark Carney said when announcing the deal earlier this year.
The Canadian government also expects the arrangement to encourage investment from Chinese companies in Canada’s electric vehicle supply chain, including partnerships related to raw materials processing and battery production.
Canada has sought to attract investments across the EV ecosystem in recent years, leveraging its reserves of critical minerals and access to renewable energy. Current projects include a battery factory being built in Ontario by PowerCo as well as a joint venture battery plant developed by Stellantis and LG Energy Solution.
The agreement also forms part of a broader effort by Canada to strengthen trade ties with China in areas such as energy, agriculture and clean technology.
“In a more divided and uncertain world, Canada is building a stronger, more independent, and more resilient economy,” the Prime Minister’s office said in a statement announcing the trade arrangement.
Canadian officials said the partnership is intended to diversify trade while encouraging new investments in areas including solar power, wind energy and energy storage technologies.
“At its best, the Canada-China relationship has created massive opportunities for both our peoples,” Carney said earlier this year. “By leveraging our strengths and focusing on trade, energy, agri-food, and areas where we can make huge gains, we are forging a new strategic partnership that builds on the best of our past, reflects the world as it is today, and benefits the people of both our nations.”