Canada Imposes 100% Tariff on Chinese-Made Electric Vehicles

Canada announced on Monday that it will impose a 100% tariff on imports of electric vehicles (EVs) made in China, following the lead of the United States, which recently implemented similar tariffs. Western governments, including Canada and the U.S., argue that China’s subsidies give its industries an unfair advantage in the global market.

The decision was made after U.S. national security advisor Jake Sullivan met with Canadian Prime Minister Justin Trudeau and his Cabinet on Sunday. Sullivan is scheduled to visit Beijing for the first time on Tuesday.

In addition to the EV tariffs, Trudeau announced that Canada will impose a 25% tariff on Chinese steel and aluminum. He emphasized that countries like China have gained an unfair competitive edge through these subsidies.

Tesla, which imports some EVs to Canada from its Shanghai factory, is among the affected companies. However, Tesla could avoid the tariffs by shifting its supply to Canada from its U.S. or German factories. While Chinese EV brands have not yet made a significant impact in Canada, the Chinese EV giant BYD has established a presence in the country and may enter the Canadian market as early as next year.

Chinese officials are expected to raise concerns about these tariffs with Sullivan during his visit, especially as China continues to recover economically from the COVID-19 pandemic. In May, U.S. President Joe Biden imposed significant new tariffs on Chinese products, including electric vehicles, advanced batteries, solar cells, steel, aluminum, and medical equipment.

Sullivan stressed the importance of a united approach among allied countries in addressing these issues, stating that it benefits all involved. Biden has criticized China’s subsidies, arguing that they allow Chinese companies to sell products at low prices without needing to turn a profit, which gives them an unfair advantage in global trade.

China’s ability to produce EVs for as little as $12,000, along with its vast capacity in solar cell production and steel and aluminum manufacturing, has been cited as a reason for these tariffs. Chinese officials, however, argue that their production capabilities keep prices low and support the transition to a green economy.

Trudeau emphasized that Canada’s actions are in line with other global economies that recognize the challenge posed by China’s policies. Deputy Prime Minister Chrystia Freeland announced that Canada will also begin a 30-day consultation on possible tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals, and solar panels. Freeland accused China of using overcapacity and oversupply to weaken industries in other countries and vowed to protect Canada’s promising EV sector.

The Chinese Embassy in Canada responded by criticizing the move, calling it trade protectionism and a politically motivated decision that violates World Trade Organization (WTO) rules. The embassy warned that China will take necessary measures to protect the rights of its enterprises.