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Mark Carney’s deal to allow Chinese electric vehicles to enter Canada with a low tariff rate will make trade talks with the U.S. tougher, the Canadian Vehicle Manufacturers’ Association says.

Brian Kingston, the organization’s chief executive officer representing Canadian auto plants of the Detroit-based General Motors, Stellantis and Ford, said the Prime Minister’s decision last month to remove the 100% tariff on EVs and replace it with a 6.1% most-favoured-nation rate “further complicates” trade talks later this year.

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EV deal signed

Following the agreement that saw China lift high tariffs on Canadian agricultural products, including canola, in exchange for as many as 49,000 Chinese-made EVs to enter the country per year, U.S. President Donald Trump lashed out at Carney by threatening to impose 100% tariffs on Canadian goods if a more comprehensive trade deal is negotiated with China.

Carney has said his government has no intention of further negotiations on trade with China.

Kingston said Mexico has made more progress on talks with the U.S. after the country raised tariffs on Chinese cars and other goods, with some as high as 50%.

“The Mexicans are advancing the discussions faster with the Americans,” he said at the Canadian International Auto Show in Toronto, reports Bloomberg .

“They’ve taken the opposite approach. They did allow China in, but now they realize that was a mistake and they put their tariffs up on Chinese vehicles.”

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Diversify trade

While the federal government is working to diversify its trade by attracting Chinese manufacturers to set up shop in Canada to build and export EVs around the world, Kingston said that is “highly unrealistic” as the country already has a manufacturing sector churning out an excessive amount of vehicles.

“We hope they understand just how tough the conditions are to make a profit here and this is not the global south where you dump product,” he said of Chinese manufacturers.

“This is a place where if you want to be a partner and be a part of it, then you’re going to have to grind it out like everybody else.”

Kingston said he is optimistic that Canada will eventually reach a trade with the U.S. that would either lower or eliminate tariffs on the auto industry.

“There’s no such thing as diversifying away from America,” he said. “So we will get an agreement and there will be an industry that continues to be integrated.”

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