Canada will remove the additional 100% tariffs it imposed on imports of Chinese electric vehicles, Prime Minister Mark Carney said during a state visit to Beijing, signalling a shift in Ottawa’s trade approach toward China’s fast-growing EV sector.

Speaking during the visit, Carney said the punitive duties would be replaced with a volume cap and a significantly lower tariff rate. Under the new policy, Canada will allow up to 49,000 Chinese-made electric vehicles to enter the country, with shipments within that quota subject to a standard tariff of 6.1%.

The move marks a sharp reversal from Canada’s earlier stance, which had aligned closely with the United States and the European Union in raising concerns about alleged unfair subsidies and excess capacity in China’s EV industry. The 100% tariff had effectively shut Chinese electric vehicles out of the Canadian market.

Carney said the revised framework aims to strike a balance between protecting domestic industry and giving consumers access to more affordable electric vehicles, while avoiding an escalation of trade tensions with China. He did not provide details on when the new measures would take effect or how the import cap would be administered.

China is the world’s largest producer and exporter of electric vehicles, with manufacturers increasingly seeking overseas markets as competition intensifies at home. Canada, meanwhile, has been positioning itself as a hub for EV manufacturing and battery supply chains, backed by significant government incentives.

The announcement comes as Canada and China seek to stabilise economic ties after years of strain over trade, technology, and geopolitical issues. Analysts said the decision could ease bilateral tensions and open the door to broader discussions on trade and investment, though it may face pushback from domestic automakers and labour groups concerned about increased competition.

Explore more exclusive insights at nextfin.ai.

S. Korea Vows to Engage U.S. on Semiconductor Tariffs, Mitigate Biopharma Impact