Canada slaps hefty 100% tariffs on Chinese electric vehicles and 25% on steel and aluminium imports, escalating trade tensions and aligning with U.S. and EU measures.
Canada has announced plans to levy a 100% tariff on electric vehicles (EVs) manufactured in China, aligning with similar measures recently introduced by the United States and the European Union. Additionally, Canada will impose a 25% tariff on Chinese steel and aluminium imports. This move comes as Western nations, including Canada, have accused China of subsidising its EV industry, thus granting Chinese automakers an undue competitive edge.
In response to these allegations, China has labelled the tariffs as an act of “trade protectionism” and contends that such measures breach World Trade Organization regulations. Canadian Prime Minister Justin Trudeau emphasised the country’s goal to transform its automotive sector into a global frontrunner in the future vehicle industry, highlighting the challenges posed by countries like China that, according to him, seek competitive advantages through unfair practices.
The new Canadian tariffs on Chinese EVs are set to be implemented starting from October 1, with the tariffs on steel and aluminium following on October 15. China defended the growth of its EV industry, attributing it to sustained technological innovation, industrial and supply chains, and vigorous market competition. According to a statement from China’s embassy in Canada, China’s competitive edge in the EV market stems from utilising its comparative advantages and adhering to market principles rather than government subsidies.
China remains Canada’s second-largest trading partner, following the United States. In a recent development, the United States announced a substantial increase in tariffs on Chinese EV imports, raising them to 100%. This was soon echoed by the EU, which declared tariffs of up to 36.3% on EVs manufactured in China.
Furthermore, the tariffs will affect Tesla vehicles produced at its Shanghai facility. Industry commentator Mark Rainford suggested that Tesla might seek exemptions from these tariffs in Canada, similar to its efforts in Europe. Should these attempts not sufficiently reduce the tariffs, Tesla might consider shifting its Canadian imports to its American or European factories, given the significance of Canada as its sixth-largest market this year.
Despite efforts, Tesla has yet to respond to inquiries from the media regarding this issue. Earlier, the EU reduced its additional planned tariff on Tesla vehicles from China by over half after further investigations prompted by the automaker. Although Chinese car brands are not widely prevalent in Canada, companies like BYD are making inroads into the Canadian market.
As China continues to dominate as the world’s largest EV manufacturer, Canada is actively forging multi-billion dollar agreements with major European automakers in a bid to secure a significant role in the global EV industry.
