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Canada-China Trade Deal Sparks EV Industry Anxieties

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  Published in Automotive and Transportation on Saturday, January 17th 2026 at 15:35 GMT by Global News

Ottawa, ON - January 17th, 2026 - A recently implemented trade agreement between Canada and China, formally removing a 2.5% tariff on electric vehicles (EVs) imported from China, is generating significant anxieties within Canada's nascent electric vehicle industry. While proponents herald the deal as a potential boon for Canadian consumers, industry experts and business leaders are voicing serious concerns about the competitiveness of Canadian manufacturers against the juggernaut of the Chinese EV market.

The agreement, which took effect earlier this week, is a component of a broader trade deal initially signed in 2022. Beijing has consistently lauded the arrangement as a catalyst for enhanced bilateral trade relations. However, the immediate impact is expected to be a surge in competitively priced Chinese EVs entering the Canadian market.

A David and Goliath Scenario

The core of the concern lies in the substantial subsidies and government backing that Chinese EV manufacturers receive. According to Ian Lee, a business professor at Carleton University, these subsidies create a significant price advantage, making it exceedingly difficult for Canadian companies to compete. "The Canadian industry is still in its infancy," Lee explained. "We're building up our EV supply chains and are only just beginning to see vehicles rolling off the assembly lines, a stark contrast to the established infrastructure and government support available to Chinese manufacturers."

Flavio Volpe, president of the Automotive Parts Manufacturers Association, articulated the situation bluntly: "It's a David versus Goliath situation." China's scale of production is staggering, producing upwards of 3.4 million EVs in 2023 alone - a figure that dwarfs Canada's current output. The sheer volume, coupled with subsidies, allows Chinese manufacturers to produce EVs at a considerably lower cost. Volpe accuses China of "dumping excess capacity" onto global markets, a practice that effectively undermines the viability of smaller, emerging industries like Canada's.

Consumer Benefit Questioned, Industry Protection Missing

The Canadian government has presented the trade deal as a means to lower costs for Canadian consumers. However, this assertion is being heavily scrutinized. Critics argue that the primary beneficiaries will be Chinese exporters, not Canadian drivers. The potential for a flood of cheaper Chinese EVs to saturate the market could depress prices overall, but it also poses a serious risk to Canadian EV manufacturers and the jobs they create.

NDP trade critic Tracey Holland echoed these sentiments, questioning the true beneficiaries of the agreement. "The real question is, who benefits from this deal?" she asked, emphasizing the absence of protections for Canadian businesses. Holland specifically points to the lack of a mechanism within the deal to address potential unfair trade practices from China, leaving Canadian companies vulnerable to predatory pricing and market manipulation.

Looking Ahead: Parliamentary Debate and Future Considerations

The trade deal is expected to be a central topic of debate in Parliament next week. This debate will likely focus on the potential economic consequences for Canada's EV sector and whether additional measures are needed to support domestic manufacturers. Possible avenues for action might include increased government subsidies for Canadian EV production, investment in domestic supply chains, and a re-evaluation of the trade agreement's provisions to include safeguards against unfair trade practices.

The long-term success of Canada's EV industry hinges on its ability to innovate, secure funding, and establish robust supply chains. However, the current trade agreement with China presents a formidable challenge, highlighting the delicate balance between fostering international trade and safeguarding the competitiveness of domestic industries. The coming weeks and months will be crucial in determining whether Canada can navigate this complex situation and ensure a sustainable future for its electric vehicle sector.