26 August: Canada is set to introduce new tariffs on electric vehicles (EVs) manufactured in China, as well as on Chinese steel and aluminum products, to prevent these imports from gaining a substantial presence in the North American market. Prime Minister Justin Trudeau announced the measures during a federal cabinet retreat in Halifax, stating that tariffs on Chinese-made EVs would increase to 106.1% on October 1, up from the current rate of 6.1%. Additionally, tariffs on Chinese steel and aluminum products will rise to 25% on October 15, with a detailed list of affected products to be released by October 1.
Trudeau explained that these steps are part of Canada’s strategy to become a global leader in the automotive sector by fostering a competitive environment. He criticized China for its alleged unfair trade practices, which he said compromise the security of key Canadian industries and displace local workers in the automotive and metal sectors.
The decision to raise tariffs aligns Canada with the United States, which announced a fourfold increase in tariffs on Chinese-made EVs earlier this year, citing Beijing’s subsidies to Chinese EV manufacturers. The U.S. has also delayed its tariff implementation from August to September due to ongoing national security investigations concerning internet-connected vehicles from China and other countries.
Finance Minister Chrystia Freeland also cited unfair trade practices and inadequate environmental and labor standards in China that allow for the dumping of underpriced products into the market, causing harm to both the environment and workers. She warned that Canada is prepared for potential retaliatory actions from China, which has already responded to similar measures from the U.S. and Europe by initiating anti-dumping investigations on European agricultural products.
Despite not currently being a major player in Canada’s EV market, Chinese imports have surged recently, particularly after Tesla shifted production for its Canadian sales from the U.S. to its Shanghai plant. Chinese EV manufacturer BYD has also established a presence in Canada and is planning to enter the market soon. The new tariffs aim to prevent these Chinese companies from gaining a strong foothold in Canada, following their rapid expansion in Europe.
Freeland emphasized that China’s state-driven policies of overcapacity and oversupply are intended to undermine domestic industries, a strategy that Canada will not allow to affect its burgeoning EV sector. The Canadian government has already imposed several trade remedies against Chinese steel imports, which have doubled since 2020.
Industry groups such as the Canadian Steel Producers Association and the Aluminum Association of Canada have praised the new tariffs as proactive measures to protect local workers. They also noted that aligning Canada’s trade policies with its North American partners would help protect the region from unfairly traded and high-carbon imports.
However, some criticisms have emerged. Conservative deputy leader Melissa Lantsman argued that the government should have acted sooner and should consider additional tariffs on EV batteries, solar cells, semiconductors, and critical minerals. The government is currently holding consultations on possibly extending tariffs to these products, but must carefully consider the implications for supply chains critical to Canada’s own EV industry.
Additionally, Canada has ended federal rebates of up to $5,000 for Chinese-made EVs, now limiting these incentives to vehicles manufactured in countries with free trade agreements with Canada, such as Korea, Japan, and Europe.
Critics like Joanna Kyriazis from Clean Energy Canada argue that the 100% tariff is excessive, suggesting that a lower rate, similar to Europe’s 36.3%, would have been more balanced. She warned that these high tariffs could reduce the availability of affordable EVs in Canada, increase costs, and potentially lead to more climate pollution by limiting consumer options.
While Europe has seen a higher adoption rate of EVs, with about 25% of new car sales being electric, Canada lags with only 12% of its new car sales in the same category. The new tariffs may further complicate Canada’s path to wider EV adoption by potentially making EVs less accessible to consumers.
At Halifax Cabinet Retreat, Trudeau Announces Significant Tariff Increases On Chinese-Made Electric Vehicles To 106.1% Starting October 1, And Hikes Tariffs On Chinese Steel And Aluminum To 25% Effective October 15.
