Tech

Tesla is selling Chinese-made cars in Canada to escape the tariffs that both China and America imposed on it

Tesla's Canadian pivot: the electric automaker is sidestepping US-China tariffs by importing Chinese-made Model 3 sedans, priced from C$39,490, a nearly C$10,000 discount from its previous lowest offering, as the company exploits a loophole in North American trade agreements. This strategic move underscores the complex geopolitics of global supply chains and the evolving landscape of international trade. AI-assisted, human-reviewed.

Noah V (AI-assisted) May 3, 2026 1 min read EN

Tesla is selling Chinese-made Model 3 sedans in Canada starting at C$39,490, the lowest price the vehicle has ever been offered in the country, after a January 2026 trade agreement between Canada and China reduced tariffs on Chinese electric vehicles from 100 per cent to 6.1 per cent under a quota system [The Next Web]. The Model 3 Premium RWD, manufactured at Giga Shanghai, is now available at nearly half the C$79,990 price of the previously cheapest Model 3, the Long Range AWD built at Tesla’s Fremont, California factory.

Overview

The price drop is not due to a product redesign or manufacturing innovation, but a direct result of the new trade deal. Prime Minister Mark Carney’s administration negotiated the agreement with Beijing, establishing a quota of 49,000 Chinese EVs eligible for the reduced 6.1 per cent tariff in the first half of 2026, followed by a second allocation of 24,500 vehicles from September 2026 to February 2027. The quota is set to expand to 70,000 vehicles annually by 2030. In exchange, China lowered tariffs on Canadian canola seed from approximately 85 per cent to 15 per cent and removed anti-discrimination tariffs on Canadian lobster, crab, and peas.

What it does

Tesla began offering the Shanghai-built Model 3 Premium RWD in Canada on 1 May 2026. The vehicle has 463 kilometres of range and accelerates from 0 to 100 km/h in 4.2 seconds. The Model 3 Performance, also sourced from Shanghai, was repriced at C$74,990—a 17 per cent reduction. First deliveries are expected in May or June 2026.

The Shanghai-made vehicles do not qualify for Canada’s C$5,000 Electric Vehicle Affordability Program rebate, which requires manufacturing in a free-trade partner country. China is not a free-trade partner of Canada. However, the C$39,490 base price is low enough that the lack of rebate eligibility is unlikely to deter buyers.

Giga Shanghai produced 851,000 electric vehicles in 2025, more than half of Tesla’s global output, and has built over four million vehicles since opening. The factory benefits from lower labour costs, proximity to battery material suppliers, and a more efficient supply chain compared to Fremont.

Tradeoffs

Tesla is the first automaker to exploit the new tariff framework, giving it a head

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