After US, Canada hits Chinese EVs with 100% tariff, planning to impose a 25% duty on steel, aluminium

Canadians considering the purchase of a Chinese-made electric vehicle (EV) may need to make a decision soon. Prime Minister Justin Trudeau has announced that starting October 1, 2024, Canada will impose a 100 per cent tariff on EVs built in China.

This move comes after similar actions were taken earlier this year by the United States, which also applied a 100 per cent tariff, and the European Union, which introduced duties of up to 36.3 per cent on Chinese-made EVs.

In addition to the EV tariff, Canada is planning to impose a 25 per cent duty on Chinese steel and aluminium, set to take effect on October 15. These measures are part of a broader strategy by Canada and its Western allies to counter what they view as unfair trade practices by China.

The main concern is that China’s government subsidies are giving its EV industry an advantage in the global market, making it difficult for other countries to compete on a level playing field.

Prime Minister Trudeau emphasized that Canada is working to transform its automotive sector into a global leader in the production of next-generation vehicles. However, he noted that China’s approach, which includes substantial government support for its EV industry, undermines fair competition. The tariffs are intended to protect and promote Canada’s emerging role in the global EV industry.

China has responded by criticising the tariffs, describing them as “trade protectionism” and arguing that they violate World Trade Organization (WTO) rules.

According to a statement from the Chinese embassy in Canada, the rapid growth of China’s EV industry is due to technological innovation, efficient supply chains, and market competition, rather than government subsidies. China is Canada’s second-largest trading partner, and the tariffs could strain the economic relationship between the two nations.

Tesla, which manufactures some of its vehicles in Shanghai, will be particularly affected by these new tariffs. The company is expected to lobby the Canadian government for exemptions, as it has done in Europe. If unsuccessful, Tesla may shift its Canadian imports to its factories in the United States or Europe. Canada is Tesla’s sixth-largest market, making it a significant concern for the company.

Although Chinese car brands are not yet widely seen in Canada, some, like BYD, are beginning to enter the market. China’s dominance in the global EV market, as the world’s largest producer, means that these tariffs could have broader implications for the industry.

At the same time, Canada is pursuing partnerships with major European automakers, securing deals worth billions of dollars. These efforts are part of Canada’s strategy to position itself as a key player in the global EV industry, reducing its reliance on imports from countries like China. The upcoming tariffs signal a shift in Canada’s approach to trade and industrial policy, aiming to strengthen its domestic automotive sector in the face of growing international competition.