Auto Group Calls on Feds to Scrap Chinese EV Deal, Says No Canadian Auto Sector Without US

Access to the U.S. automotive market is essential to Canada’s auto industry, while Ottawa’s agreement with Beijing on Chinese electric vehicles puts the North American auto supply chain at risk, a Canadian auto industry representative told MPs.

Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers’ Association (CVMA), testified on June 9 before the House of Commons international trade committee, which is currently studying the upcoming Canada–United States–Mexico Agreement (CUSMA) review and its implications for Canada.

Kingston told MPs that more than 90 percent of Canadian auto production is destined for the United States, making U.S. market access and North American integration “the foundation of the auto industry.”

“Diversification is not an option for automotive, as markets in Europe and Asia are better served by assembly plants in those regions,” Kingston said. “Canada’s market alone is too small to justify large-scale manufacturing.”

“Simply put, there is no Canadian auto industry without the U.S.”

The future of Canada’s auto industry and the hundreds of thousands of jobs that it supports require securing the Canada-United States trade relationship, he added, noting that U.S. tariffs on the auto industry and Canada’s retaliatory measures are doing “enormous damage to the integrated North American auto supply chain.”

As Canada prepares for the July 1 CUSMA review, Kingston said his association is recommending Ottawa eliminate its “strategic partnership” with Beijing and scrap the deal it made on allowing 49,000 Chinese EVs into Canada at a reduced tariff rate of 6.1 percent tariff from the previous 100 percent rate.

Prime Minister Mark Carney visited China in January, where he signed several agreements with Beijing, including the deal on EVs, and declared Canada and China were in a “strategic partnership.”

Ottawa has said 49,000 EVs represent less than 3 percent of Canada’s auto market, but Kingston said it represents roughly 30 percent of the number of EVs sold in Canada last year. Statistics Canada data indicates Canada sold 115,049 battery electric vehicles in 2025.

“That’s not an insignificant amount, and that undermines our sector right now, and it puts the North American auto supply chain at risk,” he added.

Meanwhile, Kingston noted that China does not adhere to rules-based trade and investment principles and there are no guardrails in the agreement to ensure a “level playing field” for manufacturers that have invested in Canada, or to protect Canadians from cyber risks.

Ban Chinese Connected Vehicles

In addition to having a surtax on Chinese EVs, the CVMA is urging the federal government to ban certain Chinese connected vehicle software to align with the United States, Kingston said.

“This will protect Canadian drivers from foreign actors manipulating these technologies to access sensitive or personal information,” he said. “It will also position us for success in our discussions with the Americans.”

Two U.S. lawmakers recently announced a bill aimed at preventing Chinese connected vehicles from entering the United States via Canada and Mexico, amid growing concerns over the vehicles having the ability to collect and transmit data about drivers back to China.

U.S. Representative Haley Stevens and Senator Elissa Slotkin, both Democrats, said connected vehicles could be “remotely accessed and tampered with,” presenting a “tremendous” risk to U.S. safety and security. They also noted the Chinese auto industry is heavily subsidized, allowing Beijing to “undercut competitors and quickly flood new markets.”

Recent data from Global Affairs Canada indicates 2,910 Chinese EVs were allowed into Canada for the first time in May, after Ottawa made the deal with Beijing.

The initial 49,000-unit quota will exceed 63,000 units per year by February 2031, according to data tabled in the House of Commons on May 29 by International Trade Minister Maninder Sidhu.

Sidhu said the arrangement is expected to catalyze new Chinese investment in Canada and create new auto manufacturing jobs for Canadians.

Chinese state media Xinhua reported in March that several of Chinese automaker BYD’s EV models were undergoing Transport Canada’s preliminary review process. The company’s executive vice president also reportedly said the company was conducting a feasibility study for building an auto manufacturing plant in Canada.

Industry Minister Mélanie Joly told MPs at a parliamentary meeting in May that her government’s approach to Chinese EVs is “very holistic” in protecting auto workers and supply chains “while bringing in really good technologies.”