Canada will impose new tariffs on electric vehicles, aluminum and steel made in China, aligning itself with its Western allies and taking steps to protect domestic manufacturers.
The government announced a 100 percent tax on electric cars and a 25 percent tax on steel and aluminum, confirming an earlier report by Bloomberg News. Prime Minister Justin Trudeau unveiled the policy in Halifax, Nova Scotia, where he met with the rest of his cabinet for a series of meetings on the economy and foreign relations.
The additional tax on electric vehicles will take effect on October 1 and will also cover certain hybrid passenger cars, trucks, buses and delivery vans. It will be on top of an existing 6.1 percent tariff on Chinese electric vehicles, the government said in a press release.
The levies on aluminium and steel will take effect on 15 October. The government published an initial list of products on Monday and the public will have a chance to comment before the levies are finalised on 1 October.
The Trudeau government is also launching a new 30-day consultation on other sectors, including batteries and battery parts, semiconductors, solar products and critical minerals.
“We are transforming Canada’s automotive sector to become a global leader in manufacturing the vehicles of tomorrow,” Trudeau told reporters in Halifax. “But players like China have chosen to give themselves an unfair advantage in the global marketplace.compromising the safety of our critical industries and displacing dedicated Canadian workers in the automotive and metalworking industries.”
Canada, an export-driven economy that relies heavily on trade with the United States, has been closely watching the Biden administration’s moves to erect a much higher tariff wall against Chinese electric vehicles, batteries, solar cells, steel and other products. Canada’s auto sector is heavily integrated with that of its nearest neighbor: the vast majority of its light vehicle production (which was 1.8 million tons) is produced in China. 1.5 million units last year) is exported to the United States.
Finance Minister Chrystia Freeland, the most powerful person in Trudeau’s cabinet, has been one of the most prominent voices calling for a tougher approach to Chinese vehicle exports and becoming a closer trading ally with the United States.
In June, it announced a public consultation on possible measures to make it more difficult for Chinese companies to sell electric vehicles in the Canadian market. During an interview with Bloomberg News in July, he said the tariff consultation could go beyond electric cars.
The government also announced Monday that it will limit eligibility for electric vehicle incentives to products manufactured in countries that have negotiated free trade agreements with Canada.
It will review the new levies within one year of their entry into force.
EU seeks to impose new tariffs on Chinese electric vehicles
The European Union has also announced proposals to impose new tariffs on electric vehicles imported from China, albeit at lower levels than those proposed by the United States and now Canada.
Products made by SAIC Motor Corp. face additional tariffs of 36.3 percent, while Geely Automobile Holdings Ltd. and BYD Co. face tariffs of 19.3 percent and 17 percent, respectively, according to a draft decision released last week. Tesla Inc. will see an additional 9 percent charge on vehicles made in China.
Chinese leaders plan to raise the tariff issue during a visit by U.S. national security adviser Jake Sullivan this week, according to the official Xinhua news agency. Sullivan is scheduled to meet with Foreign Minister Wang Yi and may also meet with Chinese leader Xi Jinping.
China has retaliated against Canada in the past. Previously restricted imports of Canadian canola seeds for three yearsa move seen as retaliation for Canadian authorities’ decision to arrest Huawei executive Meng Wanzhou in Vancouver pursuant to a US extradition warrant. Meng returned to China in 2021.
According to Statistics Canada data, the value of Chinese electric vehicles imported into Canada increased to 2.2 billion dollars Canadian dollars (C$1.6 billion) last year, compared with less than C$100 million in 2022. The number of cars arriving from China at the Port of Vancouver increased after Tesla Inc. began shipping Model Y vehicles there from its Shanghai factory.
However, the Canadian government’s main concern is not Tesla, but the prospect of cheap cars made by Chinese manufacturers eventually being on the market. BYD informed the Canadian government in July that it intends to lobby lawmakers and officials about its plans to enter the country.
Trudeau also faced political and industrial pressure. The Canadian auto sector had been pushing him to raise tariffs to protect domestic jobs and wages, arguing that electric vehicles from China are cheaper because of much weaker labor standards. The government has also bet big on automakers and manufacturers from democratic allies: The government has agreed to multibillion-dollar subsidies for electric vehicle plants or battery factories for Stellantis NV, Volkswagen AG and Honda Motor Co., among others.
Canadian steel and aluminum producers have also repeatedly and publicly urged the government to restrict China’s access, saying Xi’s industrial policy allows the Asian powerhouse to unfairly flood foreign markets, putting local jobs at risk.
