University of Windsor engineering professor and automotive expert Dr. Peter Frise discusses how Canada’s evolving trade relationships with China and Europe could affect the country’s auto sector and manufacturing base. (MICHAEL WILKINS/University of Windsor)
By Victor Romao
As Canada recalibrates its trade relationships with China and deepens economic ties with Europe, questions are emerging about what those shifts mean for the country’s auto industry and manufacturing base.
Peter Frise, a University of Windsor engineering professor and automotive expert, discusses how recent trade developments could affect vehicle imports, regional suppliers and Canada’s long-term competitiveness in a changing global market.
Q: What does the new Canada–China EV arrangement actually change?
It’s not a brand-new deal — it largely restores the trade situation that existed before 2024.
When the U.S. imposed a 100 per cent tariff on Chinese EVs, Canada followed suit. China responded with tariffs on Canadian canola and seafood, which hurt those sectors.
The recent agreement rolls back those measures. China reduces tariffs on our agriculture and seafood exports, and Canada resumes limited EV imports under quotas.
For the auto sector, the impact should be modest. Canada had import quotas before, and we didn’t see a surge of Chinese vehicles entering the market.
Q: Will Canadians soon be buying $13,000 Chinese EVs?
That’s unlikely.
The quota is based on number of vehicles, not price, so manufacturers are more likely to ship higher-margin models.
Imported vehicles must also meet Canadian safety standards and require dealership networks, parts and service support. Once those costs are added, ultra-cheap EVs won’t remain ultra-cheap.
Federal incentives also favour vehicles built in Canada or in free-trade partner countries — which China is not.
Q: How could the Canada–China agreement affect Windsor–Essex?
In the short term, probably very little.
The agreement focuses on imports. However, if Chinese automakers ever establish assembly operations in Canada, local tool and die and manufacturing suppliers could benefit.
Windsor–Essex remains a global centre for tool and die expertise. Any regional impact would depend entirely on future investment decisions.
Q: What about Canada’s growing ties with Europe?
Europe represents a market of roughly 460 million people. Strengthening those ties makes strategic sense, especially amid U.S. trade uncertainty.
We’re already seeing European investment in Canada, including Volkswagen’s battery plant in St. Thomas.
At the same time, the Detroit Three have reduced their Canadian footprint, while Toyota and Honda continue expanding.
Canada still produces about 1.5 million vehicles annually — about half what it did 25 years ago — and the mix of players is shifting. Diversifying trade relationships could help stabilize manufacturing through that transition.
Frise says Canada’s long-term competitiveness will depend on diversifying trade relationships, strengthening domestic manufacturing capacity and ensuring workers can adapt as the auto sector undergoes significant technological change.
Whether through renewed stability with China or deeper ties with Europe, flexibility will be key to the future of Canadian manufacturing.