Why Canada’s Chinese EV bet is a big mistake

Canada’s decision to slash tariffs on Chinese electric vehicles is being sold as a pragmatic trade adjustment. In reality, it looks more like a self-inflicted wound to the country’s auto industry, workforce, and long-term economic sovereignty.

Lower prices today may come at the cost of lost manufacturing tomorrow — along with vehicles that struggle with quality and cold-weather reliability in a country where winter is not a minor inconvenience but a defining reality.

A vehicle that looks competitive on paper may tell a very different story after several Canadian winters.

Under an agreement announced earlier this month, Canada will allow up to 49,000 Chinese EVs into the country each year at a tariff of just 6.1%, down from the 100% rate imposed in 2024.

Officials emphasize that this represents less than 3% of the domestic market. But auto markets are shaped at the margins. Even a relatively small influx of aggressively priced vehicles can disrupt pricing, undercut domestic producers, and discourage future investment.

Under pressure

Canada’s auto sector is deeply integrated with the United States, with parts, vehicles, and labor flowing across the border daily. That system has supported hundreds of thousands of well-paying jobs for decades. Introducing low-cost Chinese imports into that ecosystem does not simply add consumer choice; it destabilizes a supply chain already under pressure from regulatory mandates, rising costs, and declining market share.

That pressure is already visible. The combined market share of General Motors, Ford, and Stellantis in Canada has fallen from nearly 50% to roughly 36%. These companies are not just brands on a dealership lot. They are employers, investors, and anchors for entire communities. When their market position erodes, the consequences ripple outward through plant closures, canceled expansion plans, and lost supplier contracts.

Cold comfort

Supporters argue that Chinese EVs will make electric vehicles more affordable, accelerating adoption and helping Canada meet emissions targets. But affordability without durability is a hollow promise. Many Chinese EVs entering global markets have yet to prove themselves in extreme climates. Cold weather is notoriously hard on batteries, reducing range, slowing charging times, and increasing mechanical stress — conditions Canadian winters deliver in abundance.

Reports from colder regions already using Chinese EVs raise concerns about performance degradation, software issues, and inconsistent build quality. Battery thermal management systems that perform adequately in mild climates can struggle in deep cold. Door handles freeze, sensors fail, and range estimates become unreliable. These are not minor inconveniences when temperatures plunge and drivers depend on their vehicles for safety as much as transportation.

Quality concerns extend beyond climate performance. Chinese automakers have made rapid progress, but speed has often come at the expense of long-term durability testing. Western manufacturers spend years validating vehicles under extreme conditions precisely because failure carries real consequences. A vehicle that looks competitive on paper may tell a very different story after several Canadian winters.

Cheap creep

There is also the question of what happens to Canada’s manufacturing base as these imports gain a foothold. History offers a clear lesson. When markets are flooded with low-cost vehicles produced under different labor standards and supported by state-backed industrial policy, domestic production suffers. Plants close, jobs disappear, and skills erode — losses that are extraordinarily difficult to reverse.

Europe offers a cautionary example. In the rush to meet climate targets, policymakers opened the door to inexpensive Chinese vehicles, only to see domestic automakers squeezed between regulatory costs and subsidized foreign competition. The result has been declining investment, layoffs, and growing concern about long-term competitiveness. Canada risks repeating that mistake but without Europe’s scale or leverage.

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Tom Williams/CQ-Roll Call, Inc via Getty Image

Spy game

The geopolitical implications cannot be ignored. Modern EVs are data-collecting machines, equipped with cameras, sensors, GPS tracking, and constant connectivity. U.S. officials have repeatedly warned that Chinese-built vehicles pose national security risks. Whether or not those fears are fully realized, perception matters. The United States has already signaled that Chinese EVs will not be allowed across its border, even temporarily.

That leaves Canadian consumers in a difficult position. A vehicle purchased legally in Canada could become a barrier to travel, commerce, or even family visits. The idea that a car could determine whether a driver can cross the world’s longest undefended border should give policymakers pause. Instead the Carney government appears willing to accept that risk as collateral damage.

Realism over resentment

Some Canadians, frustrated by U.S. tariffs and rhetoric, may view this pivot toward China as an act of defiance. But trade policy driven by resentment rather than realism rarely ends well. Replacing dependence on the United States with dependence on China does not restore sovereignty; it simply shifts leverage from one superpower to another, often with fewer shared values and less transparency.

President Donald Trump has made his position clear. He is open to Chinese companies building vehicles in North America if they invest in domestic factories and employ domestic workers. What he opposes are imports that bypass production, undermine jobs, and introduce security risks. Canada’s deal does nothing to address those concerns. Instead it places Canadian workers and consumers squarely in the crossfire.

The promise of cheaper EVs may sound appealing in the short term, but the long-term costs are becoming harder to ignore. Lost manufacturing jobs, weakened supply chains, unresolved quality and cold-weather issues, and strained relations with Canada’s largest trading partner are not abstract risks. They are predictable outcomes.

Canada built its auto industry through integration, investment, and a commitment to quality. Undermining that foundation for a limited influx of low-cost imports is not a strategy. It is a gamble — and one Canadian workers, manufacturers, and drivers are likely to lose.