Canada’s agreement with China to reduce tariffs on a limited volume of electric vehicles is expected to benefit manufacturers that already hold North American certification and have expanding overseas operations, according to analysts cited by Bloomberg.
The deal, announced last week, allows up to 49,000 Chinese-made electric vehicles to enter Canada each year at a most-favoured-nation tariff rate of 6.1%, down from the 100% tariffs imposed in 2024. The move marks a significant shift in Canada’s EV trade policy and could reshape competition in the domestic market.
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Bloomberg Intelligence analysts, including Joanna Chen, said early beneficiaries are likely to include Tesla and Geely-controlled brands Volvo Car and Polestar, which already meet North American regulatory requirements. Tesla was a major EV importer into Canada before the tariff hike, shipping more than 44,000 vehicles in 2023, the last full year before duties were raised.
Under the agreement, Transport Canada is expected to accelerate vehicle certification, with approval for new Chinese EVs potentially completed in as little as eight weeks, Bloomberg reported, citing a government official familiar with the matter.
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A spokesperson for Geely said the impact would vary across its brands but described the tariff reduction as a positive development overall. Geely’s portfolio includes Volvo, Polestar and sports car maker Lotus, which said the lower tariffs could cut the planned Canadian price of its Eletre electric SUV by about 50%, potentially lifting demand.
China’s largest new energy vehicle maker, BYD, currently has minimal passenger-car sales in Canada but is also expected to benefit. The Canadian government said more than half of the Chinese EVs allowed under the agreement are projected to be priced below C$35,000 within five years, positioning them as mass-market offerings.
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BYD has operated in Canada since 2013 and opened a factory in Ontario in 2019 to assemble electric buses. Chinese state broadcaster Shenzhen TV said the tariff reduction would support BYD’s localisation efforts and strengthen its North American sales network.
Other automakers are also signalling interest. Nio said in late 2025 that its Firefly sub-brand was expanding its presence across Europe, North America and Asia, marking its first public reference to North American ambitions.
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The agreement comes as Ottawa seeks to balance domestic industrial policy with consumer affordability and trade relations. While the quota limits the immediate influx of Chinese EVs, analysts say the faster certification process and lower tariffs could quickly change competitive dynamics in Canada’s fast-growing electric vehicle market.
