North America’s two largest auto markets are moving in sharply different directions on Chinese electric vehicles. In Washington, a bipartisan group of lawmakers is trying to turn existing restrictions on Chinese-connected vehicles into a lasting statutory barrier, with another Senate push expected after lawmakers return in November. Canada, meanwhile, has removed the 100% surtax it imposed on Chinese-made EVs in 2024 and created a limited route for tens of thousands of them to enter at the normal 6.1% tariff.
Neither policy is quite as simple as “closed” versus “open.” The American legislation remains unfinished, while Canada’s program is capped, permit-controlled and subject to Canadian vehicle standards. But the divergence is becoming increasingly significant for automakers, workers and buyers on both sides of the border.
Washington Wants to Turn Its Regulatory Wall Into Law
The latest American push centres on the Connected Vehicle Security Act of 2026, sponsored by Republican Senator Bernie Moreno of Ohio and Democratic Senator Elissa Slotkin of Michigan. The legislation cleared the Senate Commerce Committee unanimously in July, but an attempt to move it more quickly through the full Senate ran into objections. Congressional aides told Reuters on September 30 that its sponsors now expect to try again when the Senate returns from recess in November. A companion effort in the House has attracted more than 100 co-sponsors, giving the proposal significant congressional support without guaranteeing final passage.
The proposal goes beyond simply imposing another import duty. Its sponsors want to restrict vehicles, software and important connected-vehicle hardware associated with China and other designated foreign adversaries. Restrictions affecting vehicles and software would begin in 2027, with hardware provisions following later. If enacted, that would put key elements of the current regulatory approach into legislation, making the restrictions more difficult for a future administration to unwind through regulatory changes alone.
Chinese EVs Already Face a Formidable U.S. Barrier
Chinese automakers are hardly operating in an unrestricted American market today. The U.S. Commerce Department finalized a connected-vehicle rule in January 2025 that restricts certain software and hardware with links to China or Russia. Software-related prohibitions begin with model-year 2027 vehicles, while restrictions involving connected-vehicle hardware generally take effect later. The rule was framed around cybersecurity and the enormous amounts of information modern connected vehicles can collect, including location and vehicle-system data.
Tariffs create another substantial obstacle. The United States raised its Section 301 tariff on electric vehicles imported from China to 100% in 2024, on top of other applicable duties. U.S. trade authorities continued to list Section 301 tariffs on Chinese products ranging as high as 100% in 2026. That combination helps explain why inexpensive Chinese EV brands that have become increasingly visible in markets from Europe to Latin America remain largely absent from American showrooms. The proposed legislation would therefore reinforce an already restrictive market rather than suddenly creating a barrier where none existed.
Canada Has Reversed Course on Its 100% Surtax
Canada stood much closer to the American position only two years ago. Ottawa imposed a 100% surtax on Chinese-made electric vehicles beginning October 1, 2024, on top of the existing 6.1% most-favoured-nation tariff. The federal government said at the time that the measure was intended to respond to what it considered unfair Chinese trade practices while protecting Canadian workers and investment in the domestic EV supply chain. That policy changed dramatically following a new Canada-China economic arrangement announced in January 2026.
Effective March 1, 2026, Canada removed the 100% surtax and established an initial annual quota allowing as many as 49,000 Chinese EVs to enter at the 6.1% tariff. The quota is scheduled to rise by 6.5% annually, reaching slightly more than 63,000 vehicles by 2030. The EV arrangement came alongside improved Chinese market access for some Canadian agricultural and seafood products, including a reduction in the combined tariff applied to Canadian canola seed from 84.8% to 14.9%.
Canada’s Market Is Opening, but It Is Not a Free-for-All
The 49,000-vehicle headline can make Canada’s policy sound broader than it is. Imports under the special tariff treatment require permits administered by Global Affairs Canada. The first quota period covered March through August 2026, while the second runs from September 1, 2026, through February 28, 2027. The second six-month allocation begins with 24,500 vehicles, with unused quota from the first period potentially carried forward Imports seeking the preferential treatment without the appropriate permit are prohibited under the program.
Eligibility is also structured around manufacturers rather than individual motorists casually ordering vehicles from overseas. Participating original equipment manufacturers must meet Canadian residency requirements or use an eligible Canadian agent, and vehicles still need to satisfy the applicable Canadian safety and certification requirements. Ottawa itself has described the system as “managed market entry.” That makes the policy better understood as a controlled opening: Canada is creating space for Chinese EVs, but it has not simply eliminated the border rules governing their sale.
Affordability Is a Major Part of Canada’s Strategy
One of the most consequential details in Ottawa’s framework concerns lower-priced vehicles. By March 2030, half of the Chinese-EV quota is expected to be reserved for vehicles with a free-on-board import value of C$35,000 or less. That does not mean Canadian consumers are guaranteed C$35,000 showroom prices—the threshold refers to the vehicle’s import value rather than its final retail price—but it clearly points toward the less expensive end of the market. Ottawa says increasing access to more affordable EVs is one objective of the arrangement.
China has become particularly formidable in that segment. The International Energy Agency reported that average battery-electric vehicle prices in China fell by more than 10% in 2025 and that roughly 30% of available BEV models had entry prices below US$20,000. The IEA also found that about 70% of battery-electric cars sold in China that year cost less than comparable internal-combustion vehicles before incentives. Those economics help explain why access to Chinese models has become both attractive to affordability advocates and deeply concerning to incumbent manufacturers.
Canadian Auto Workers and Manufacturers See a Different Risk
The policy change has encountered substantial resistance from parts of the North American auto industry. The Canadian Vehicle Manufacturers’ Association and the American Automotive Policy Council warned in January that expanding Chinese EV access could affect the highly integrated Canadian-U.S. automotive supply chain. Unifor representatives have similarly argued that companies wanting significant access to Canadian buyers should be encouraged to establish production and employment in Canada rather than rely primarily on imported vehicles. Those are stakeholder positions rather than settled findings about what the quota’s ultimate economic impact will be.
The concern carries particular weight because Canadian and American vehicle manufacturing has been intertwined for decades, with components routinely crossing the border during production. Ottawa, for its part, continues to promote domestic auto investment while describing limited Chinese EV imports as part of a broader diversification strategy. The disagreement is therefore not simply over whether Canadians should have access to cheaper cars; it is also about whether greater import competition will encourage investment, weaken existing production, or produce some combination of both effects.
Washington Is Also Thinking About the Canadian Border
Canada’s change has already entered the American policy debate. In May, Senator Slotkin and Representative Haley Stevens announced separate legislation designed to prevent Chinese-connected vehicles from entering the United States through neighbouring countries, explicitly pointing to Canada’s decision to reduce tariffs on a limited number of Chinese EVs. Their stated concern is that restrictions at American ports would be less effective if prohibited connected vehicles could simply arrive over a land border.
That does not mean a Chinese EV legally sold in Canada automatically has access to the American market. U.S. importation, software, hardware and vehicle-compliance rules remain separate. It does show, however, how Canada’s policy is increasingly being treated in Washington as part of the American regulatory question rather than an isolated Canadian trade decision. For motorists living near a border where Canadian- and U.S.-specification versions of the same conventional models have long looked almost interchangeable, Chinese-connected vehicles could introduce a much more visible regulatory dividing line.
Chinese Automakers Are Already Preparing for Canada
The policy shift is beginning to translate into concrete industry activity. Reuters reported in June that Chinese manufacturers including BYD and Chery were taking steps toward the Canadian market, while brands associated with Geely were also moving ahead. China’s ambassador to Canada said Lotus EVs owned by Geely were expected to begin shipping to Canada in July under the new arrangement. Regulatory approvals, dealership development and vehicle-certification work mean that a tariff reduction does not necessarily translate into an immediate nationwide launch, but the direction of travel is clear.
Those companies arrive with enormous manufacturing scale behind them. The International Energy Agency estimated that China produced roughly three-quarters of the world’s electric cars in 2025, while Chinese manufacturers supplied around 60% of global EV sales. Chinese electric-car exports exceeded 2.5 million vehicles that year, and the IEA subsequently reported another sharp increase in exports during the first half of 2026. Canada is consequently opening its limited quota at a moment when Chinese manufacturers are actively searching for additional overseas markets.
The U.S. Proposal Still Has Important Details to Resolve
Calling the American legislation a “permanent ban” requires an important qualification: Congress has not yet enacted it. One reason the latest fast-track effort stalled involves the bill’s treatment of corporate ownership. Reuters reported that a provision affecting companies with more than 15% Chinese ownership raised concerns about Mercedes-Benz, which has significant passive Chinese shareholdings even though it is a German automaker. Senator Moreno said the final measure would be structured so that Mercedes-Benz would not be barred from the U.S. market.
The debate is further complicated by President Donald Trump’s own public position. Trump has said he would be open to Chinese automakers building vehicles in the United States if those factories employed American workers, even as lawmakers and major auto-industry groups have pressed for stricter restrictions. That creates an unusual situation in which the administration, Congress, labour groups and established automakers may agree on some concerns while differing over whether Chinese-controlled manufacturing inside the United States should ever be acceptable. The November legislative push will therefore concern not only imports, but also the boundaries Washington wants around Chinese participation in the American auto industry.
North America Is Developing Two Very Different EV Gateways
By late 2026, the continental divide is increasingly visible. Canada’s second quota period is scheduled to continue through February 28, 2027, giving eligible manufacturers a defined path to bring additional Chinese-made EVs into the country. The United States, meanwhile, already has high tariffs and connected-vehicle restrictions and could add a legislative layer if the Connected Vehicle Security Act advances after the Senate returns in November. Neither approach is static, and both still contain implementation questions.
For consumers, the difference could eventually become tangible on dealership lots: Canadian shoppers may encounter brands and lower-priced EV options that remain unavailable immediately across the border. For manufacturers and workers, the stakes are broader, involving investment, manufacturing capacity, technology rules and one of the world’s most integrated vehicle supply chains. What is already clear is that Canada and the United States are no longer taking identical approaches to China’s rapidly expanding auto industry. One is experimenting with limited, permit-controlled access; the other is debating how firmly to close the door through federal law.
