Canada eases EV tariffs under Carney

Canada has agreed to slash steep tariffs on Chinese electric vehicles, forging a broader trade and economic strategy under Prime Minister Mark Carney that seeks to reduce reliance on the United States and strengthen ties with global markets. The move marks a notable shift in trade policy and reflects Ottawa’s effort to insulate the Canadian economy from external shocks while balancing geopolitical pressures and domestic industrial concerns.

Under the new arrangement, Canada will allow up to 49,000 Chinese-made electric vehicles into its market each year at a reduced tariff of around 6.1 per cent, down from a previous rate of 100 per cent that had all but blocked such imports. The tariff would rise to about 70,000 vehicles annually within five years, although Chinese EVs are still expected to represent a relatively modest share of the overall Canadian market. The tariff reduction formed part of a wider agreement reached during Carney’s visit to Beijing, in which China also agreed to cut punitive duties on Canadian agricultural exports and ease levies on products such as canola seed.

Carney’s initiative reflects a broader policy ambition to “Trump-proof” Canada’s economy by diversifying trade relationships and reducing its historic economic dependence on the United States. A seasoned central banker and former Bank of England governor, Carney has emphasised infrastructure investment, enhanced access to global markets and long-term competitiveness as pillars of his economic agenda. The FT recently noted that these efforts are designed to buttress the economy against political and trade volatility, although challenges such as sluggish productivity and heavy reliance on US demand remain.

Within Canada, reaction to the tariff shift has been mixed. Some industry voices warned that reduced barriers to Chinese EVs could disadvantage domestic auto producers and complicate access to the US market, urging federal support to protect local manufacturing. Supporters counter that lower tariffs will boost consumer choice and affordability, particularly amid high vehicle prices, and help smooth diplomatic tensions that have weighed on trade.

The agreement illustrates how Canada under Carney is seeking to recalibrate its economic strategy, balancing domestic priorities with a more outward-looking trade posture. As global trade fragmentation persists, Ottawa’s approach may offer a model of pragmatic engagement that blends economic diversification with strategic diplomacy.

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