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Canada Debates EV Tariffs Amid China Trade Concerns

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  Published in Politics and Government on Thursday, January 8th 2026 at 18:10 GMT by The Globe and Mail

Toronto, ON - January 8th, 2026 - A simmering debate within the Canadian federal government has reached a critical point as Ontario officials aggressively lobby Prime Minister Justin Trudeau to retain tariffs on Chinese-made electric vehicles (EVs). The province's staunch stance is creating internal friction within the Liberal party, pitting economic protectionism against calls for improved trade relations with Beijing.

The tariffs, initially implemented in 2023, were a direct response to concerns over substantial subsidies provided by the Chinese government to its burgeoning EV industry. Ottawa, and indeed Washington D.C. which implemented similar measures, argues these subsidies create an uneven playing field, granting Chinese manufacturers an unfair advantage in the global market. The concern isn't simply about price; it's about the potential for systemic disruption to the established automotive industry in North America.

Ontario, a traditional powerhouse in Canadian auto manufacturing, is leading the charge to maintain the levies. Provincial officials fear that without them, the Canadian market could be overwhelmed by significantly cheaper Chinese EVs, potentially leading to widespread job losses and jeopardizing billions of dollars in recent investments from both domestic and international automakers. Significant commitments have been made in both Ontario and Quebec to establish and expand EV production facilities, and these investments are perceived to be at risk if a flood of subsidized vehicles enters the market.

"The long-term viability of the Canadian auto sector is on the line," stated a source within the Ontario government familiar with the ongoing discussions. "We've seen substantial investment predicated on a stable and protected market. Removing these tariffs would not only undermine those investments but also put thousands of Canadian jobs in jeopardy."

However, the issue is far from settled. A faction within the federal cabinet is advocating for a more conciliatory approach towards China, particularly in the wake of Prime Minister Trudeau's recent diplomatic visit. These ministers believe that fostering stronger trade relations with China is essential for Canadian economic growth and diversification, and that removing the EV tariffs could be a goodwill gesture and unlock new opportunities for Canadian businesses across various sectors.

Industry Minister Francois-Philippe Champagne appears to be aligned with Ontario's position, privately signaling his support for maintaining the tariffs to protect the domestic industry. This backing is crucial, as Champagne's portfolio directly oversees the automotive sector. But his stance is facing resistance from other cabinet members who prioritize broader geopolitical considerations and seek to avoid further escalating tensions with China.

The potential for 'trade deflection' also looms large. If Canada were to remove its tariffs while the U.S. maintains theirs, there's a real fear that Chinese EVs intended for the American market could be rerouted through Canada, effectively circumventing U.S. protectionist measures. This scenario would not only fail to benefit Canadian manufacturers but could also provoke a retaliatory response from Washington.

The debate isn't solely about electric vehicles; it's a microcosm of a larger strategic challenge facing Canada: how to balance economic interests with geopolitical realities. Canada's relationship with China is complex, encompassing trade, investment, human rights concerns, and national security. Finding the right balance requires careful consideration and a cohesive policy approach.

The coming weeks are expected to be pivotal, as the government prepares to unveil its updated strategy on relations with China. All eyes will be on Prime Minister Trudeau as he navigates these conflicting pressures and determines the future of EV tariffs and Canada's economic relationship with the world's second-largest economy. The decision will undoubtedly have lasting consequences for the Canadian auto industry and the broader economic landscape.