Canada now allows Chinese cars to be sold and the US believes they have opened the door to the wolf

Canada is about to become the gateway of chinese manufacturers of electric cars to North America. BYD, Geely and Chery They have been preparing their landing for months in the country, and from Washington they are watching with great suspicion.

What has happened? In January, Mark Carney’s Government closed a trade agreement with China that reduced tariffs on Chinese electric vehicles from 100% to 6.1%, in exchange for Beijing lowering tariffs on Canadian agricultural products such as rapeseed or lobsters. The agreement allows the entry of up to 49,000 Chinese electric cars per year, with the possibility of scaling up to 70,000 in five years. March 1, Ottawa opened the application process of import permits.

Tensions. This decision comes amid trade tensions with the United States under the Trump administration, which has imposed tariffs on both Canada and China. “We take the world as it is, not as we would like it to be,” counted at that time Carney, with the intention of diversifying its alliances.

Who arrives and how. According to the DSMA advisory firm, which is mediating between Chinese manufacturers and Canadian dealers, three brands lead the race: BYD, Geely and Chery. The three are working in parallel on the approval of vehicles, the construction of distribution networks and agreements with local financial partners. Jason Zhao, director of Asian market development at DSMA, estimates that the first cars could arrive at the end of 2026. It would look like this:

• BYD wants to open 20 dealerships in a year, starting in the Toronto area and then expanding to Vancouver, Montreal and Calgary, according to explained to The Globe and Mail Farid Ahmad, CEO of Dealer Solutions Mergers & Acquisitions. The brand is also studying the possibility of building its own production plant in the country, although, according to declared to Bloomberg a few weeks ago its executive vice president Stella Li, “no decision has been made yet.”
• Geely expects to soon receive certification from Canadian authorities for its vehicles, according to confirmed to Bloomberg Andy An, CEO of Zhejiang Geely Holding. The company already has some presence in North America through Volvo and Polestar, but Zeekr would be its first Chinese brand to reach the Canadian market.
• Cherry is hiring in Canada and has already registered several of its brands, including Omoda, Jaecoo and Exeed. In statements collected According to Automotive News Canada, the company stated that it is “evaluating avenues for future development, including alliances with local players,” although without confirming dates.

The problem of times. Just because there is a trade agreement does not mean that the cars will arrive tomorrow. Stephen Beatty, industry consultant and former executive at Toyota Canada, counted to Automotive News Canada that, if starting from scratch, the homologation process can take “a year or more.” And the brands best positioned to be the first through the door are Tesla (which had already prepared its Shanghai factory to export to Canada in 2023) and Volvo and Polestar, which already operate in the Canadian market under a Chinese umbrella.

Washington’s reaction. Jamieson Greer, United States Trade Representative, qualified the agreement “problematic” and warned that Canada might regret it. The issue raises concern in Washington, since if Chinese manufacturers manage to establish themselves in Canada, the US market (the great long-term objective) will be much closer. “The obvious end goal is all of North America,” counted Tu Le, managing director of Sino Auto Insights, in the middle.

Between the lines. The United States maintains very high tariffs on Chinese cars and a ban on connectivity technology for Chinese-made vehicles, which has blocked any mass entry into its market. Canada, by opening its door, not only irritates Washington because of the direct commercial impact (about 49,000 cars are barely 3% of the Canadian market), but for what it represents: a precedent and a bridgehead.

BYD, in fact, has already publicly ruled out trying to enter the US in the short term. Stella Li, speaking to Bloomberg, described the American market as a “complicated environment” and said that the brand is focused on other markets where it can replicate its successful model in Brazil.

And now what. According to DSMA, large dealer groups in Canada they are divided: Half are actively looking to close an agreement with a Chinese brand, the other half are waiting to see how the situation evolves. The medium and small ones, on the other hand, are “all” interested, according to Zhao. Longer term, both DSMA and Sino Auto Insights estimate that between 15 and 20 Chinese manufacturers will end up operating in Canada.

Cover image | Tom Carnegie and BYD

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