Donald Trump was informed of Canada's Chinese EV plans as Ottawa looks to 'leapfrog' the U.S. on electric automaking

Many in the Canadian auto sector had predicted any softening on Chinese imports would anger Trump.

Kirsten Hillman, the outgoing Canadian ambassador to Washington, played a role in informing Trump’s team, said an official, one of two who briefed reporters covering the prime minister’s visit to China on the condition they not be identified to discuss the sensitive events leading up to Friday’s announcement.

Hillman “was aware” of the negotiations in the lead-up to a critical meeting Friday in Beijing, “and obviously there were conversations” with the Trump administration, said one insider.

“We didn’t take anybody by surprise but we needed to have a deal,” the official said, adding Prime Minister Mark Carney and Chinese President Xi Jinping “needed to meet.”

Separately, two other Canadian officials told the Star there had been no final decision before Carney and Xi sat down, and that it was only sealed at their bilateral meeting which extended into an official luncheon hosted by Xi at the Golden Hall at the Great Hall of the People.

“So once that was there, we just made sure that Jamieson Greer was aware,” said the first insider.

In Washington, Greer, the U.S. trade representative leading Trump’s trade strategy, “was quite neutral actually” when initially told what was afoot, said the official, “until his boss said something else.”

In public, Greer’s reaction was to predict Canada would regret its decision about easing access to Chinese EVs into its auto market, while Trump offered a low-key response.

It was not exactly clear when the Americans were first made aware of Carney’s talks with the Chinese — which began more than three months ago.

Neither official would reveal whether Trump’s team was advised immediately beforehand, only after it was a done deal, or whether it was brought into the loop months ago, with one source saying only that the information was “a close hold,” meaning only a very few people at the top of government were fully briefed on the status of the talks.

Before this trip, the Prime Minister’s Office downplayed any expectations of a resolution to the tariff dispute which hit Prairie farmers and coastal fishery workers hard.

Art of the trade deal 

Canadian officials believe Trump may reverse his own opposition to Chinese EVs.

“Let’s not think that President Trump will not allow Chinese EVs to come into the U.S. That is the fundamental error that many in the auto sector are making,” said an insider.

Trump is expected to visit China in April and meet with Xi.

The deal Canada reached with China will allow 49,000 Chinese EVs to be imported into Canada this year at a tariff rate of 6.1 per cent, down from 100 per cent. That is the same “most favoured nation” tariff rate applied to countries that do not have a free-trade agreement with Canada, and brings it back to the level it was at in 2023 before the tensions broke out.

The agreement slightly raises the number of EV imports from about 45,000 vehicles in 2023, mostly Tesla and Volvo models that were produced in China.

Ottawa’s expectation is that companies like Tesla and Ford, which now also make EVs in China, may be the first carmakers to ship EVS back into Canada, since they already have ties to dealerships here.

Indeed, the first official said that the Ford company’s reaction was “good” in response to Canada’s announcement, suggesting they realized they now have a market opening in Canada that they don’t have in the U.S.

Looking to ‘leapfrog’ the U.S. on EVs

The Canadian government says its agreement with Beijing’s ruling party will allow those EV import numbers to grow, contingent on Chinese carmakers agreeing to make “considerable investments” into EV auto production in Canada, including striking joint ventures and using Canadian workers, with the longer term aim to have world class Chinese expertise transferred to grow a made-in-Canada industry. The moves would ultimately supply Canada and other export markets, in Europe and beyond, all in an effort to Trump-proof the Canadian auto sector.

One official said the deal to drop tariffs combined with a revamped auto strategy to be released in February is a “way to make sure that we will leapfrog the Americans” and become the first country in North America to one day produce electric vehicles with Chinese technology, saying Canadian-developed software could allow the cars to operate and meet national data security standards.

The official pointed to QNX, a Canadian company that provides that kind of software.

But Trump’s tariff strategy — as he repeatedly states — is aimed at forcing manufacturers that produce abroad to relocate operations to America.

Premier Doug Ford railed against the Carney government’s decision, saying it threatens Ontario’s auto sector.

But one of the officials said the future of the auto sector is “electrification” and that the Carney government is looking at its “restructuring,” adding the government recognizes the premier is “concerned.”

The official admitted it won’t be easy. Plenty of “political work” remains to bring autoworkers and the premier onside, but predicted the overall strategy can be explained and will be embraced.

The Carney government is looking beyond the U.S. to diversify not only its trading partners, but to seek to play a role in offering manufacturers tariff-free access to other markets, as Canada is the only G7 country with a free-trade agreement with all the other G7 nations, the first official said.

Industry Minister Melanie Joly, who accompanied Carney in Beijing, met with Chinese EV makers BYD and Chery, as well as with Magna, the Canadian auto parts maker which operates in China supplying parts to Chinese carmakers, to start talking to those carmakers about investing in Canada, Joly’s office confirmed.

“The only way to counter U.S. protectionism is if Europe and Asia and us create a new market for ourselves without too many tariffs. If we’re able to do that, Trump’s strategy doesn’t work,” said the official.

“Nobody really in the world is leading that effort. What the Prime Minister did (in China) … is a first move of tectonic plates in the trade sector.”

‘Turnaround’ in relations 

Friday’s deal was the fruit of intensive discussions that took off in earnest after Carney met Xi on the sidelines of the Asia-Pacific Economic Cooperation summit in Korea on Oct. 31, both sides said in Beijing.

Xi hailed that meeting as marking a “turnaround” in Canada-China relations.

Initial discussions had begun, however, after Foreign Affairs Minister Anita Anand met with her Chinese counterpart Wang Yi in October. That’s when it was clear to Canada that there was a willing partner in the Chinese government wishing to resolve the tariff dispute, said the second official.

Trade tensions between Canada and China erupted in the fall of 2024 after Ottawa matched the U.S. and slapped 100 per cent tariffs on Chinese-made electric vehicles, and 25 per cent tariffs on Chinese steel and aluminum. (Canada’s tariffs on steel and aluminum remain in place.)

The decisions by the former Joe Biden and Justin Trudeau governments were described as needed to address unfair trading practices by China. Canada and the U.S. said heavily subsidized Chinese manufacturers were able to churn out cheaply made vehicles and materials to be dumped into global markets at excessively low prices. They also cited security concerns with Chinese EVs which they said were capable of collecting sensitive data via sophisticated software that could then be fed to Beijing.

In retaliation, China slapped punishing tariffs on Canadian canola products of up to 85 per cent, and on pork, crab, lobster and peas. Friday’s deal saw most of those tariffs dropped to a combined level of 15 per cent, starting March 1, but China’s pork tariff of 25 per cent remains, a third official said. Canada did work out an agreement to reinstate certification of Canadian “pork establishments,” said another official.

That, of course, was then.

This is now.

Two-way trade amounts to nearly $120 billion a year, and Carney said Friday he has set an “ambitious goal” to increase exports to China by 50 per cent by 2030 as a result of the newly revised “strategic partnership” with China.

He predicted the next four years will lead to a bilateral trade boon as a result of the tariff reductions, and of a series of other agreements aimed at increasing trade and co-operation on energy, agriculture, financial services, tourism, culture and on public safety and security.

In a joint statement, Carney and Xi said they had laid out a “road map” co-operation, touting it as a new era in Canada-China relations.