Tariffs Could Bring Tesla’s Biggest Rival To America’s Doorstep

The Trump administration is relying on tariffs to improve the country’s trade position around the world. According to a recent report by Carscoops, it might have the unintended consequence of giving Chinese automaker BYD a foothold in North America. Although it won’t matter as much with the tariffs in place, if those tariffs lift, this could be strong competition for Tesla.

Canada and Mexico are being hit by a 25 percent tariff on vehicles and parts exported into the United States. The idea is to encourage automakers to move production to plants inside the US. How well that will work remains to be seen, as it’s not an easy thing to just up and relocate a factory. There are signs that it may be having some impact, however, as Honda recently announced that it is keeping production of its next-gen Civic in Indiana rather than relocating to Mexico.

Canada Gives China The Cold Shoulder

That’s a positive outcome from the tariffs, but one possible negative outcome is the chance that Canada could choose to reconsider working with Chinese companies like BYD. The Canadian government has taken a hard stance towards Chinese companies, which makes them understandably cautious about making any investments in Canada.

TikTok’s Canadian branch has closed, DeepSeek is banned, and three Chinese mineral companies were all ordered to divest their assets. It’s not exactly a positive environment for the Chinese.

There are multiple reasons for keeping Chinese companies out. Part of the rationale is the issue of national security, but there is also a strong desire to protect domestic industries and to align with the US.

Despite this, BYD once expressed an interest in manufacturing in Canada. Resistance to the idea was strong, so the company backed off its efforts. Now, with the tariff, there’s a chance Canada could reconsider its stance on China.

An Opening For BYD

According to The Logic, China’s ambassador to Canada, Wang Di, has been doing a round of interviews of late to discuss not just its challenges investing in Canada, but how that door is not closed. BYD sees an investment in Canada as something that could be mutually beneficial in the future, although it’s not being pursued at the moment. Canada has already heavily invested in EV manufacturing and needs to continue to support domestic interests, but turning down a heavy investment from BYD may become more challenging in the face of tariffs.

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For BYD, it’s a huge opportunity to continue its winning streak. The company is proving to be tough competition for Tesla, surpassing it in annual sales. Additionally, BYD recently announced new technology that it says will charge a car in as little as five minutes, eliminating the pain of sitting at a charging station and killing time on road trips. It also has incredibly cheap EVs.

The Tariff Challenge

A large part of BYD’s success comes from its affordability. The Seagull sells for under $10,000 US dollars in China. The US doesn’t even have a car that cheap with your most affordable option, the Nissan Versa, coming in at $17,190, not including a $1,140 destination fee. The problem for BYD is the 102-percent tariff imposed by the Biden Administration on all Chinese-made EVs. It’s priced so low to begin with that it could still be a good deal, but BYD certainly won’t have the same pricing advantage that it does at home.

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The new tariffs on Canadian imports shuffle the entire picture. They encourage automakers to pull manufacturing from Canada to the US, which pulls money and jobs out of the country as well. Investment from BYD could be helpful, but there’s still the matter of national security and protecting domestic interests.

If Canada chooses to work with BYD, and that’s a big if, it would give the company a foothold in North America. Tariffs can always be lifted and the Trump administration won’t be in charge forever. Getting a manufacturing facility in Canada could give BYD easy entry into the US when the political climate changes.

Source: CarScoops, The Logic