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Chinese EVs on the Rise
China has become the world’s largest exporter of new‑energy vehicles, shipping more than 11 million units in 2024 to markets from Belgium to Indonesia. That rapid expansion has drawn the attention of the United States, which fears a flood of cheap, government‑backed cars could undercut domestic manufacturers.
Chinese brands such as BYD and Xiaomi have taken a leading position in the global market, with BYD alone shipping millions of vehicles in 2025 and surpassing Ford in global sales for the first time. Their success is driven by large production volumes, extensive supply chains, and aggressive pricing.
US Trade Measures and the 100% Tariff
In September 2024 the U.S. Department of Commerce announced a Section 301 tariff that would raise the duty on Chinese electric vehicles to 100 %. The goal was clear: keep Chinese NEVs out of the U.S. market and protect American industry from direct competition. The rule also banned the sale of related hardware and software in the United States, effectively shutting the door on Chinese brands such as BYD and Xiaomi.
The tariff has already had a chilling effect on domestic automakers. By 2025 the U.S. had imposed a 25 % tariff on imported vehicles and key parts, and the USMCA requires 75 % of a vehicle’s content to be produced in North America. While the rule allows a tariff based on non‑U.S. content, the combined effect is a significant cost increase for any vehicle that does not meet the origin threshold.
Canada and Mexico: Unexpected Gateways
Despite the U.S. blockade, Chinese EVs have found a foothold in Canada and Mexico. Canada began importing Chinese vehicles as early as 2019, and in 2023 it shipped more than 40,000 NEVs, worth about 1.6 billion U.S. dollars. In January 2026 Canadian authorities announced a quota of 49,000 units per year, subject to a 6.1 % tariff, a surprisingly low rate compared with the U.S. 100 % duty.
Mexico has taken an even deeper approach. By 2025 Chinese automakers had captured roughly 10 % of the Mexican market, and by 2026 more than 100 factories had been established there. Brands like BYD and GAC are building plants that assemble vehicles from knock‑down kits, allowing them to meet U.S. rules of origin and potentially re‑export to the United States without triggering the 100 % tariff.
These factories are not just assembly lines; they also produce key components such as batteries and electronic control units, gradually building a full supply chain within Mexico. This strategy gives Chinese automakers a competitive edge in cost and speed of delivery to the North American market.
Ford’s Stance and the Business Reality
Ford CEO Jim Farley has been vocal about the threat posed by Chinese EVs. In a Fox interview on April 13 he warned that Chinese cars could “take a devastating blow” to the U.S. industry. He also urged Canada to reject Chinese vehicles, citing security concerns over cameras and connected systems that could lead to data leaks.
"I had driven the Xiaomi SU7, and I even openly admitted that I didn't want to give it back." – Jim Farley
Farley’s comments come at a time when Ford’s traditional gasoline and hybrid sales are falling, and its new‑energy division is still losing money. In 2025 the company’s global sales were 4.39 million vehicles, with a projected net loss of about 8 billion dollars. The CEO’s push to block Chinese cars appears to be a bid for breathing room as Ford accelerates its transition to electrification.
He also argued that Chinese NEV companies are backed by government support and enjoy major advantages in production, supply chains, and pricing. According to Farley, this gives them an unfair advantage that would “crush” domestic automakers if they flooded the U.S. market.
What the Rules of Origin Mean for the Future
The U.S. has already imposed a 25 % tariff on imported vehicles and key parts, and the USMCA requires 75 % of a vehicle’s content to be produced in North America. However, the rule allows for a tariff based on non‑U.S. content, meaning a vehicle that meets the origin threshold can still be sold, while the non‑U.S. portion is taxed separately.
Because the North American auto supply chain is highly integrated—engines, wiring harnesses, batteries move between the U.S., Canada, and Mexico—any attempt to block Chinese NEVs would likely hit domestic manufacturers first. The policy could inadvertently hurt U.S. companies like GM and Ford, which rely on parts sourced across the continent.
In short, while the U.S. government has taken aggressive steps to block Chinese electric vehicles, the reality of global supply chains and the openness of Canada and Mexico mean that Chinese NEVs will continue to find ways into the North American market. The debate over tariffs, security, and competition is far from over.