North America’s electric-vehicle trade policy is moving in two sharply different directions. In Washington, a bipartisan group of lawmakers is trying to turn existing restrictions on Chinese-connected vehicles into a lasting statutory barrier, even though the latest fast-track Senate effort has been pushed until after the November 2026 midterm elections. In Ottawa, meanwhile, Canada has already replaced its former 100% surtax on eligible Chinese EVs with a managed quota that allows 49,000 vehicles in the first year at the normal 6.1% most-favoured-nation tariff.
The contrast is bigger than a tariff dispute. It reflects competing approaches to affordability, industrial policy, cybersecurity and trade diversification at a moment when Chinese manufacturers account for a large share of the global EV market.
Washington Is Trying to Turn Its Existing Barriers Into Law
The latest U.S. push is centred on the Connected Vehicle Security Act of 2026, sponsored in the Senate by Bernie Moreno of Ohio and Elissa Slotkin of Michigan. The measure would prohibit the importation, manufacture, sale and resale of connected vehicles tied to covered foreign adversaries, with China at the centre of the debate. The Senate Commerce Committee advanced the bill in July, and the reported version was placed on the Senate legislative calendar in September. Supporters then tried to move it quickly through unanimous consent, but that effort stalled over objections from Senator Rand Paul. Moreno and Slotkin now say they intend to try again after the Senate returns in November.
That delay matters because the legislation is not yet law. It is an attempt to make current restrictions harder to reverse and, in some respects, broader. The Senate text sets a more-than-15% Chinese ownership or control threshold for a connected-vehicle manufacturer, a provision that raised questions about companies such as Mercedes-Benz because of passive Chinese shareholdings. Moreno has said the final approach is not intended to block Mercedes. The House companion effort has also attracted extensive bipartisan backing, while major automakers and several labour unions have urged Congress to act before the current session ends.
Chinese Vehicles Already Face a Formidable U.S. Wall
Washington is not starting from an open market. The U.S. Department of Commerce finalized a connected-vehicle rule in January 2025 that targets vehicle connectivity systems and automated-driving software with sufficient links to China or Russia. Under the rule, prohibitions affecting covered software and sales by Chinese- or Russian-linked manufacturers apply beginning with model year 2027. Restrictions on covered vehicle-connectivity hardware begin with model year 2030, or January 1, 2029, for hardware without a model year. Commerce has said the policy is based on risks involving data collection, remote access and potential manipulation of connected vehicles.
Tariffs create a second barrier. The Office of the U.S. Trade Representative raised the Section 301 additional tariff on Chinese electric vehicles to 100% in 2024. That means the congressional proposal is best understood as more than another tariff increase: it would put a statutory framework around restrictions that are already making direct Chinese-brand entry into the U.S. market exceptionally difficult. Supporters argue that legislation would reduce the risk of a future administration changing course through regulation alone. China, meanwhile, has rejected the U.S. approach as discriminatory and protectionist and argues that the competitiveness of its automakers reflects innovation as well as scale.
Canada Replaced Its 100% Surtax With a Controlled Quota
Canada chose a different route in 2026. Under a preliminary trade arrangement with China announced in January, Ottawa created a country-specific quota allowing 49,000 eligible Chinese EVs into Canada during the first quota year at the 6.1% most-favoured-nation tariff. The quota took effect March 1, when Canada repealed the 100% surtax it had imposed on Chinese-made EVs in 2024. Imports still require shipment-specific permits from Global Affairs Canada, and once the annual quota is exhausted, additional vehicles covered by the program cannot be imported under the quota.
The rollout is deliberately controlled rather than unlimited. Canada split the first year into two periods: 24,500 units from March through August, followed by another 24,500 from September through February, plus any unused volume carried over from the first period. Government utilization data updated September 25 showed 15,763 of the 49,000-vehicle annual quota had been used, leaving 33,237 units available. That snapshot is important because it shows the policy change has opened the market, but the full annual ceiling had not been approached by late September.
Ottawa Built an Affordability Target Into the Deal
The 49,000 figure sounds large in isolation, but Ottawa describes it as less than 3% of Canada’s new-vehicle market and roughly comparable with Chinese EV import volumes before the 2024 surtax disrupted trade. The quota is also designed to expand gradually, rising 6.5% each year. Starting in year two, 10% of the quota is to be reserved for EVs with a free-on-board value of C$35,000 or less. That affordable-vehicle share is scheduled to rise to 50% by year five. The C$35,000 threshold is an import-value test, not a promise that the final retail price at a Canadian dealership will be C$35,000.
Affordability is a significant part of the Canadian policy debate. The International Energy Agency reported that Canadian electric-car sales fell by more than 30% in 2025, with their share of new-car sales dropping from nearly 17% in 2024 to about 11% after the federal iZEV purchase incentive ended early in the year. Globally, Chinese manufacturers have helped push EV prices lower in several markets. The IEA found that around 30% of battery-electric models offered in China in 2025 started below US$20,000, while nearly 70% of BEVs sold there were cheaper than comparable combustion vehicles even before incentives.
The EV Concession Was Part of a Much Bigger Trade Bargain
Canada’s EV decision was part of a broader trade bargain, which helps explain why Ottawa accepted a policy that diverges so visibly from Washington. In its regulatory analysis, the Canadian government said the EV quota was linked to improved Chinese market access for major Canadian agricultural exports. Canada expected China to reduce combined tariffs on Canadian canola seed to roughly 15%, down from approximately 85%, and to remove relevant anti-discrimination tariffs on products including canola meal, lobsters, peas and crab through the end of 2026.
The economic interests on each side are different. Ottawa estimated that the canola-seed change could improve access for roughly C$4 billion in annual exports, while relief for the other covered agricultural goods involved about C$2.6 billion in trade. At the same time, the government said the EV arrangement could encourage Chinese joint-venture investment in Canada and broaden consumer choice. Critics in Canada’s auto sector have argued that import access arrived without guaranteed manufacturing investment and could intensify pressure on domestic plants and suppliers. The result is a trade-off Ottawa has framed as managed market access, while labour and parts-industry representatives continue to question whether the industrial benefits will materialize.
Chinese Automakers Are Already Preparing for the Canadian Market
Chinese automakers have not treated the Canadian opening as theoretical. Reuters reported in June that Chery had begun meeting Canadian dealers shortly after the January policy announcement and was road-testing vehicles in Canada. BYD had started compliance procedures for two passenger models and was working on dealership plans. Lotus, controlled by China’s Geely, was also planning additional Canadian retail locations, while Changan had a team preparing for a possible launch. Those moves suggest the quota is already influencing commercial planning even before the market is fully developed.
Canada is attractive for reasons that go beyond its annual sales volume. Its buyers favour many of the same crossovers and SUVs that are popular in the United States, while its safety and regulatory environment gives manufacturers experience in a North American setting. Reuters quoted industry participants describing Canada as a potential “practice run” for eventual U.S. ambitions. That does not mean Canadian market access automatically creates an American route: U.S. tariffs, connected-vehicle rules and proposed ownership restrictions remain separate barriers. But dealer relationships, cold-weather testing, certification work and brand-building in Canada can still give Chinese manufacturers practical experience on the continent.
China’s Global EV Scale Helps Explain the Stakes
The intensity of the U.S. debate is easier to understand against China’s global scale. The International Energy Agency estimates that Chinese automakers supplied about 60% of global electric-car sales in 2025 and that China produced nearly three-quarters of the world’s electric cars. Chinese electric-car exports more than doubled to over 2.5 million vehicles that year. In many markets outside the United States and Europe, imported Chinese models have become a major source of lower-priced EVs. That combination of scale, cost and rapid model development has made Chinese competition a strategic issue for established automakers.
U.S. industry groups have responded accordingly. The Alliance for Automotive Innovation, which represents many large automakers, has urged Congress to make the Chinese-vehicle restrictions permanent, while unions including the UAW and Teamsters have backed the Senate legislation. Ford chief executive Jim Farley said this week that the United States should be extremely careful about how Chinese automakers enter the market, pointing to Europe’s experience with rising Chinese competition. Beijing disputes the premise that Chinese vehicles should be excluded on economic or security grounds, calling the restrictions unfair. The disagreement is therefore about both market competition and how governments define acceptable technology and ownership risk.
Canada and the U.S. Are Now Testing Two Very Different Strategies
The policy split creates a new complication for an auto industry built around highly integrated North American supply chains. Canada is permitting a limited, expanding flow of Chinese EVs and openly hopes that market access can eventually encourage local investment. The United States is moving in the opposite direction, with lawmakers seeking to lock in restrictions on vehicles, software, hardware and ownership links. A separate 2026 proposal, the Protecting America from Chinese Cars Act, would specifically bar covered connected vehicles from entering the United States through borders including Canada and Mexico if enacted.
For consumers and manufacturers, the practical message is that a Chinese EV being legal for sale in Canada does not make it legal for sale or import in the United States. The two countries are increasingly applying different tests to the same technology: Canada is using quotas, tariffs, certification and investment expectations to manage entry, while the U.S. is emphasizing exclusion and national-security controls. The next major milestones will be the U.S. Senate’s renewed attempt after the November elections, the pace at which Canada’s quota is actually used, and whether Chinese companies convert early Canadian retail activity into meaningful local manufacturing or supply-chain investment.
