Canada Hits China Hard: New Tariffs on EVs, Steel, and Aluminum Set to Impact Trade

Canada has announced new tariffs on imported electric vehicles (EVs), aluminum, and steel from China. This measure aligns with similar actions by Western allies like the United States and Europe, which have warned of additional tariffs on Chinese EVs.

Bloomberg reported that Canada’s Prime Minister Justin Trudeau announced during a cabinet meeting in Halifax, Nova Scotia, that Canada would be introducing a 100% tariff on Chinese EVs and a 25% tariff on steel and aluminum.

With the existing tariff of 6.1%, the tariffs on Chinese EVs will now total 106.1%. The increased tariffs on electric vehicles will take effect on October 1, while those on aluminum and steel will begin on October 15.

Trudeau emphasized that “we all know that China is not playing by the same rules” and stressed that Canada is coordinating these actions with other economies worldwide.

This decision comes just 30 days after Canadian authorities initiated public consultations regarding EVs and related products from China. The Canadian government plans to start another 30-day public consultation on additional items, including Chinese batteries, battery components, semiconductors, and solar products.

Analysts suggest that Canada’s move to implement additional tariffs against China reflects its alignment with U.S. policies, especially given Canada’s significant trade reliance on the U.S. Last year, most of Canada’s 1.5 million small cars were exported to the U.S.

The European Union imposed tariffs of up to 46.3% on Chinese EVs starting in November. The U.S. has also indicated plans to raise tariffs on Chinese EVs from 25% to 100%, with details to be finalized this week.

According to Statistics Canada, imports of Chinese EVs surged from 100 million CAD (approximately 74 million USD) in 2022 to 2.2 billion CAD (around 1.6 billion USD) last year, with most of these imports coming from EVs manufactured by Tesla at its Shanghai plant. This indicates that Chinese brands have a limited impact on the Canadian market.

However, Bloomberg pointed out that the Canadian government is considering these additional tariffs to preempt a potential influx of low-priced Chinese EVs rather than just focusing on Tesla. Previously, Chinese company BYD announced plans to lobby Canadian authorities regarding its market entry strategy.

Canada is also reviewing its tax incentives for electric and other environmentally friendly vehicles, aiming to narrow these benefits to cars manufactured in countries with which Canada has free trade agreements.

China responded immediately with its embassy in Canada condemning the decision as an act of protectionism and political dominance that disregards World Trade Organization (WTO) regulations. China has vowed to take all necessary measures to protect the legitimate rights and interests of Chinese companies.