New Canada-China trade deal sees Canada reduce tariff on Chinese EVs to 6.1%

Canadian prime minister Mark Carney and Chinese president Xi Jinping announced on January 16, 2026, that a trade deal has been agreed between the two countries. As part of this deal, Canada will allow an annual quota of electric vehicles imported from China to be subject to Canada’s most-favoured-nation tariff rate of 6.1%.

James McLoughlin James McLoughlin James McLoughlin Assistant Editor

Published 16 January 2026 - 18:25 Modified 16 January 2026 - 18:30

2 min

Mark Carney Xi Jinping Canada China trade deal EV tariffs

Canadian prime minister Mark Carney met with Chinese president Xi Jinping during the first official visit to China by a Canadian PM since 2017

China's Ministry of Foreign Affairs

The deal was agreed during Carney’s first official visit to Beijing, where he met with president Xi to discuss a new strategic partnership between the two nations. They agreed to collaborate in the key areas: energy, clean technology and climate competitiveness.

Read more: Chinese vehicle exports rise by 15% in 2025, with Mexico as biggest export market

New vehicle exports from China have hit 4.95m units within the first nine months of 2025, up 14.8% since last year. Of this, almost a tenth (410,739 units) were exported to Mexico, the country’s biggest export destination.

The agreement will see Canada allow up to 49,000 Chinese EVs into the Canadian market at the most-favoured-nation (MFN) tariff rate of 6.1%, exempt from the 100% surtax it introduced on Chinese-made EVs in October 2024. The surtax previously applied to electric and certain hybrid passenger automobiles, trucks, buses and delivery vans and was added on top of the 6.1% MFN rate.

The 49,000-vehicle quota, the Canadian prime minister said, corresponds to “volumes in the year prior to recent trade frictions on these imports (2023-2024), representing less than 3% of the Canadian market for new vehicles sold in Canada”.

Carney has said that this move will “drive considerable new Chinese joint-venture investment in Canada with trusted partners to protect and create new automotive manufacturing careers for Canadian workers and ensure a robust build-out of Canada’s EV supply chain”.

Furthermore, it is anticipated that in the five years’ time, over half of these vehicles imported from China will be affordable EVs with an import price of less than $35,000, which will create new lower-cost options for Canadian consumers.

At its best, the Canada-China relationship has created massive opportunities for both our peoples. 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.” – Mark Carney, prime minister of Canada

Finished Vehicle Logistics North America 2026 will explore how OEMs and logistics providers are reshaping networks and technology to keep pace with today’s rapid production and distribution shifts

21-23 April | Huntington Beach, CA

In the first half of 2025, Canada imported C$48 billion ($34.5 billion) worth of goods from China, with motor vehicles and parts representing 5.8% of all Canadian imports from China.

Data from Statistics Canada also shows that imports of motor vehicles and parts to Canada from China declined by 12% in H1 2025 when compared with H1 2024 – likely a result of the introduction of the additional 100% tariff in October 2024.

With this new deal removing the additional surtax on Chinese EV imports, it’s likely we will see higher volumes of Chinese-made EVs imported into Canada in the year ahead, perhaps closer to the pre-tariff numbers upon which the deal’s quote is based.

As such, Canada’s ports will need to be prepared for the potential of higher vehicle imports from China, and OEMs that export vehicles to China will no doubt be preparing their supply chains accordingly.