Canada And China Could Do Serious Harm To The USA’s Automotive Industry
100 years ago, Ford was the most dominant automotive brand in the world, thanks to the Model T. While Karl Benz is seen as the father of the automobile, it was Henry Ford who studied meatpacking plants and realized that the same practices could be implemented in a car factory. The result was the first mass-produced car in history, and it actually became cheaper during its production run. It became so affordable that assembly workers could afford one, and the era of freedom of mobility began.
Given the above, you’d expect Ford to remain a dominant force in the automotive industry, but no. The Model T was in production from October 1, 1908, to May 26, 1927, and while many different body styles were available, the car itself didn’t change much. General Motors realized that it could also use mass-production, but it also implemented new and exciting brands with staggered prices and annual model year updates. Basically, GM created the concept of keeping up with the Joneses. If you were the only person with a 1928 Chevy in the cul-de-sac, you were a failure compared to all the gentlemen with 1930 models. Similarly, if you could afford a Pontiac, Oldsmobile, Buick, or Cadillac, you were higher up the social ladder than a pleb driving around in a Chevy.
The point is, empires crumble. And the US automotive industry is facing a serious threat from China following a recent tariff announcement made by Chinese leader Xi Jinping and Canadian PM Mark Carney.
Should We Be Worried About The Deal?
Before we answer that question, let’s just look at the basics of the deal. China is going to lower the tariff on Canadian canola oil from 85% to 15%, while Canada will only tax imported Chinese cars at 6.1%. In case you were wondering, that tax was 100% in 2024, or nearly the same as the USA. That 100% made it impossible for automakers like Lotus to sell cars in Canada in the USA, because an Emeya would cost roughly $200,000, or double what it costs in the UK. That’s because Lotus builds its EVs in China. Only the Emira and Evija are still built in the UK.
To keep things from getting out of hand too quickly, Canada has put the cap at 49,000 Chinese vehicles per year. That figure will increase to 70,000 cars over five years. That’s less than 3% of the total market in Canada, but enough to do some serious damage. The big question is how quickly Chinese automotive brands can get their vehicles across the pond and into Canada?
Well, if we study the rest of the globe, it’s a matter of months. China’s automotive industry is a colossus, and it operates at a level we’ve never seen on the planet before. Globally, China accounts for 30.2% of all cars sold, and the vast majority of cars sold there are made there. In the USA, 16.2 million new cars were sold last year, which is an increase of 2.4%. In China, 34.4 million cars were sold in 2025, which is a 9.4% increase.
Can A Chinese Automaker Beat Tesla?
Like many other places on the planet, the best-selling EV in Canada is the Tesla Model Y. Why? Well, aside from making many mistakes in the past, Tesla is the trendsetter. Without Tesla, every other EV in the world would potentially not exist. Like Ford, Tesla made EVs mainstream, and it seemed unbeatable, but empires tend to fall. The first cracks started appearing in May 2025. That was the first time BYD (which stands for ‘Build Your Dreams’) outsold Tesla in Europe. This was a big deal. If you’ve ever been to London, you’ll know you can spot the latest automotive trends in Kensington. Roughly 10 years ago, the street parking was a sea of 911s. In the 2020s, it’s stacked with Teslas. Will it soon be packed with BYDs?
The 10 Biggest Car Markets In The World
In some countries, car sales are up. In others, it is less rosy. The latest stats show which countries sold the most cars in 2024.
It seems likely if we look at the numbers. BYD sold 2.25 million battery-electric vehicles (BEVs) in 2025, while Tesla only sold 1.63 million. To make things worse, this is the second year in a row Tesla sales have declined (9%), while BYD’s sales increased by 28%.
If you do some digging on Europe’s car websites, it’s not hard to see why Tesla is having a tough time. A Model Y Long Range RWD sells for £48,990, while the Long Range AWD costs £51,990. BYD hits back with 6 different electric models, across a massive price range. In the UK, Tesla only sells the Model 3, Model Y, and Cybertruck. Its cheapest car (Model 3 Standard, 332 miles of range) sells for £37,990. BYD’s cheapest car (Dolphin Surf) starts at £18,675 and comes with 137 miles. If you pay £21,975, you get a Dolphin Surf with 200 miles.
BYD has managed to get the same sort of mileage as Tesla from its high-end models, but it doesn’t appear to be the main focus. For the same price as a base Model 3, BYD will sell you the Atto3 SUV with 260 miles of range, but fully loaded. We’re talking all the latest feel-good gadgets, and interiors that are easily on par with what South Korea is doing these days.
In summary, BYD has an impressive range of cars with adequate range, loaded with the latest technology, but selling for a lot less than the establishment. The Dolphin Surf is essentially an electric Kei car, and we love those. The BYD Seal is a 5-Series-sized luxury sedan with 354 miles of range, and it can sprint to 60 mph in 3.8 seconds. Fully-loaded, it costs £48,730, the same as a Model Y Long Range RWD. And if sedans aren’t your thing, the Sealion 7 (the Chinese EV naming game sucks) is an attractive SUV Coupe that also costs the same as a Model 3.
Why Should America Be Worried About What Canada Is Doing?
The USA used to be Canada’s main source of cars, but President Trump’s tariffs made the Canadians look elsewhere. As a result, Mexico became the top supplier to Canada for the first time in over 30 years. And that’s where China comes into play.
If we look at the model Chinese automakers have followed in other countries. All they need is a foothold, and the product does the rest. You may laugh at that, but the product is good. We’ll use a European favorite as an example. If you want a Fiat 500e with 199 miles of range, you have to pay £26,995 before options. The BYD Dolphin gives you one extra mile and way more features, and it costs £21,975. That’s a difference of £5,020, or ~$6,700 at the time of writing. If you’re an entry-level buyer, that matters.
I think that’s why the Canadians capped sales at 49,000 per year. Looking at other countries, it takes roughly two years for the Chinese from entry to making it to the top 10 sales charts. The value for money is off the charts, and you have the Chinese government subsidizing its automakers because they own a stake. In theory, they could consume an entire country’s automotive market using subsidies, and then boost prices once it’s done.
The most interesting thing will be seeing how the Canadians respond, because they have the power. The PM may limit the number of cars imported, but what happens when 49,000 is not enough, and there’s more demand? That’s even fewer cars imported from the USA. It seems unlikely, given China’s reputation on the global stage. But think about the device you’re currently reading this on. There’s a 70% chance it was made in China, and it knows way more about you than your car ever will…
link
