There is no question that the United States under Donald Trump has become a far less trustworthy trading partner for Canada. Thus, to diversify its trade portfolio away from us, Canada recently announced it reached an agreement with China that includes allowing 49,000 Chinese electric vehicles (EVs) into Canada at a tariff rate of 6.1 percent instead of the prevailing 100 percent.
Such a move would be anathema to the Trump administration, but it would be smart to do the same thing here for two main reasons. First, it would significantly hasten the shift to electric vehicles, yielding significant economic and environmental benefits. Second, it would heighten consumer demand for quality, affordable EVs.
If done the way we articulate below, it would jumpstart the heretofore stagnant U.S. EV industry, giving U.S. automakers a fighting chance to not only survive, but flourish.
Our argument rests on the fact that Chinese automakers are now producing high-quality, low-cost EVs with ranges that rival their gasoline-powered counterparts. Some sell for as little as $8,000 in China. The cheapest EVs have a range of nearly 200 miles on a single charge, slightly more expensive models have a 300 to 400 mile range, while top-of-the-line EVs can travel more than 500 miles. Charging times, meanwhile, are getting shorter. Many Chinese EVs can charge in less than 7 minutes, and the fastest take only 5 minutes, roughly the time it takes to fill a gas tank.
Finally, Chinese EVs have been getting outstanding reviews for handling and comfort. Even Ford Motor Company CEO Jim Farley raves about them. When asked about his Chinese-made Xiaomi SU7, he said, “I’ve been driving it for six months now, and I don’t want to give it up.”
A low import quota is key
To be sure, we wouldn’t be having this conversation if it weren’t for the Chinese government’s massive subsidies for EV and battery production. While estimates vary on the subsidies’ size, they were likely worth more than $200 billion during the decade when China was laying the industry’s foundation. Since then, it has withdrawn many of the subsidies as the 500 registered EV startups in 2018 dropped to 100 viable manufacturers in 2025, but it is ready to jump back in if needed.
We don’t advocate anything like that level of subsidies, though we would at least initially reinstate some of the Biden-era tax credits that were helping increase consumer demand for domestically produced EVs before Trump got rid of them. No matter what we do, however, we have to acknowledge right off that EVs sold here—and especially EVs built here—will never be as cheap as the ones sold in China.
The goal of any pro-EV policy we adopt should be to avoid cutting U.S. autoworkers’ wages or eliminating union jobs. On the contrary, it should boost both, which is why a relatively low quota for Chinese EV imports is key to any plan. By letting in just enough Chinese EVs so that only a small number of consumers can buy them, we’re confident—again based on their quality and cost—that demand for EVs in the United States will grow quickly. That would signal to domestic producers to get into the EV game in a way they’ve thus far avoided.
One reason U.S. automakers have been reluctant to jump in is that they simply don’t have the production acumen that heavily subsidized Chinese companies have acquired. Therefore, another essential part of any policy would be to insist on technology transfer.
This transfer could take one of two forms. First, the United States could require that a certain percent of the cars sold here are made here, with that percentage rising over time. And to give Chinese firms more incentive, their quota of sales could increase as they produce more cars here. The other form is requiring Chinese companies to work directly with established U.S. automakers. If Ford or GM jointly produced vehicles with a Chinese manufacturer, it could be the basis for increasing import quotas.
We’re lagging way behind
Our proposal begs the question of whether the Chinese would agree to such an arrangement. If not, then there’s no deal. The United States must protect its domestic industry. But we believe China would jump at the chance to invest directly in U.S. EV and battery production and, in fact, would recognize the hardball industrial policy of the sort we’re recommending as similar to its own manufacturing playbook. In any case, China has made similar deals with Thailand and Brazil, so it is clearly open to such arrangements.
We are not naïve about the security concerns raised by working with China on such a project. But as the economist Noah Smith recent pointed out, cybersecurity experts are making progress on this challenge and the fact is that “detecting and countering Chinese espionage and sabotage efforts will be important whether we buy Chinese cars or not, since China already makes so many of our electronic devices.”
Regardless of how much we fear China, we have to look at the ascendency of EVs with clear eyes. More than 60 percent of the cars now sold in China, which has a much larger market than the United States, are electric. In Europe, sales of EVs now outnumber sales of pure gasoline-powered cars. EV sales are also growing rapidly in such large developing countries as Turkey and Brazil. Here in the United States, EVs sales are stuck at 8 percent.
All signs suggest that within the next decade the overwhelming majority of the vehicles sold worldwide will be electric, especially outside the United States. Do we want the U.S. auto industry to be an active player in that market? If not, we can follow Trump’s lead to build walls around the country, leaving American drivers with little choice other than to buy more expensive, polluting, gas-fueled vehicles (unless they want to do their car shopping in Canada). Or will U.S. automakers get in the game and grab market share by producing high-quality, affordable EVs?
Even if you choose to ignore the impact oil-powered vehicles have on the climate, making a play for EVs and batteries is essential for maintaining our auto industry, our industrial base, our global competitiveness, and the jobs that come with all of the above. Enacting a quota on Chinese EVs while building out domestic production would be a great way to get started.
Dean Baker, a regular Money Trail contributor, is a senior economist at the Center for Economic and Policy Research. Jared Bernstein was chair of the Council of Economic Advisers during the Biden administration. A version of this column originally appeared on Baker’s Substack site.
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