Canada’s Prime Minister Justin Trudeau announced on Monday that the country would be imposing 100% import tariffs on Chinese electric vehicles, following in the footsteps of the United States and the European Union. This decision comes as a response to concerns related to unfair subsidies provided by the Chinese government to its electric vehicle industry.
Currently, Canada already imposes a 6.1% tariff on electric vehicles manufactured in China and imported into the country. The new 100% tariff is set to go into effect on October 1st. In addition to the tariffs on electric vehicles, Canada will also be implementing a 25% tariff on China-made steel and aluminum imports, starting on October 15th. China is the third-largest country for steel imports into Canada, according to the Canadian Steel Producers Association.
The Canadian government’s finance department stated that the EV, steel, and aluminum industries in Canada face “unfair competition” and trade practices from China. This move is aimed at leveling the playing field for Canadian workers and allowing domestic industries to compete both domestically and globally.
Vincent Chan, a China strategist at Aletheia Capital, believes that while Canadian tariffs may hinder China’s EV growth momentum, they will not entirely eliminate it. This sentiment is echoed by a spokesperson from the Chinese Embassy in Canada, who expressed “strong dissatisfaction and resolute opposition” to the tariffs, stating that they violate WTO rules and will damage trade and economic cooperation between China and Canada.
The Chinese Embassy’s spokesperson emphasized that China’s EV industry has seen rapid development due to technological innovation, established industrial and supply chains, and full market competition. They also noted that China’s EV industry does not rely on government subsidies for its growth.
Chinese electric vehicle maker BYD made headlines in 2019 when it opened its first bus assembly plant in Canada and rolled out electric buses in Toronto. However, Chinese brands have yet to establish a significant presence in the Canadian market, according to Chinese state media Global Times.
In 2023, automobile imports from China to Canada’s largest port in Vancouver saw a 460% year-over-year increase to 44,356 vehicles. This surge in imports was largely attributed to Tesla’s decision to ship electric vehicles made at its Shanghai factory to Canada. Tesla, a major player in the global EV market, did not immediately respond to requests for comment on the Canadian tariffs.
Looking ahead, Canada has announced plans to review other industries critical to the country, such as batteries, semiconductors, and solar products. These reviews aim to assess the impact of Chinese imports on Canadian industries and determine if further measures are needed to protect domestic interests.
As the global trade landscape continues to evolve, Canada’s decision to impose tariffs on Chinese electric vehicles reflects a broader trend of countries taking steps to safeguard their domestic industries from unfair competition. The implementation of these tariffs will undoubtedly have ripple effects on the EV market and trade relations between Canada and China. Only time will tell how this move will shape the future of the electric vehicle industry in both countries.