Canada vs. China: Trade War Heats Up with New Chinese Investigation into Tariff Policies

The Chinese government has retaliated against Canada’s decision to impose new tariffs on Chinese-made electric vehicles (EVs), aluminum, and steel by launching an “anti-discrimination investigation.”

On Thursday, China’s Ministry of Commerce stated that under the country’s Foreign Trade Law, it reserves the right to take action if any country imposes discriminatory prohibitions or restrictions. The ministry announced it would investigate whether Canada’s actions fall into that category.

The investigation will focus on Canada’s plans to impose a 100% tariff on Chinese electric vehicles starting next month and a 25% tariff on steel and aluminum products, as well as restrictions on the scope of countries eligible for Canada’s clean energy vehicle subsidies.

China’s Ministry of Commerce also plans to examine additional Canadian measures, including potential tariffs on Chinese batteries, solar products, semiconductors, and critical minerals, which Canada has reviewed since the 10th. While investigations typically last three months, the ministry indicated that this could be extended under special circumstances.

In addition to the 100% tariff on Chinese EVs and a 25% tariff on steel and aluminum, Canada signaled further tariff increases on Chinese batteries and components, solar products, semiconductors, and key minerals.

In response to these escalating tensions, China has also initiated its own probe, targeting Canadian exports, particularly canola seeds, a vital ingredient in canola oil production.