Canada to impose 100% tariffs on Chinese electric vehicle imports, including Tesla models

In a move similar to the United States, Canada has announced a 100% tariff on electric vehicles imported from China, including Tesla models. The move is a response to what Western countries see as unfair Chinese subsidies.

Canada imposes 100% tariffs on Chinese-made electric vehicles

In response to Chinese subsidies seen by Western countries as unfair, Canada announced Monday that it would impose 100% tariffs on electric vehicles imported from China. The move follows the tariffs imposed by the United States.

The Associated Press reports that U.S. national security adviser Jake Sullivan met with Canadian Prime Minister Justin Trudeau and cabinet members on Sunday and encouraged them to make the statement. On Tuesday, Sullivan will travel to Beijing for the first time.

According to Trudeau, Canadian steel and aluminum will also be subject to a 25% tariff. “Players like China have chosen to give themselves an unfair advantage in the global market,” he continued.

Tesla’s Canadian market faces new challenges

Although Tesla, a U.S. company, could get around the tariffs by resupplying Canada from its facilities in the United States or Germany, one of the Chinese-made electric vehicles shipped to Canada comes from the company’s factory in Shanghai.

In Canada, Chinese brands are still in their infancy. But last spring, Chinese electric vehicle giant BYD created a Canadian corporate structure and has already hinted that it plans to try to enter the Canadian market as early as next year.

Biden’s tariffs influence Canada’s trade policies

As Beijing struggles to revive its economy after the COVID-19 outbreak, Chinese officials are likely to raise concerns about U.S. tariffs with Sullivan. Electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment from China have all been subject to steep new tariffs imposed in May by U.S. President Joe Biden.

“The United States believes that a united front and a coordinated approach on these issues benefits all of us,” Sullivan told reporters Sunday.

Biden said Chinese companies are enjoying an unfair trade advantage because the government subsidizes their electric vehicles and other consumer goods so they don’t have to make a profit.

Electric vehicles made in China can sell for $12,000 or less. Chinese steel and aluminum mills and solar cell factories can meet most of the world’s demand. Chinese officials say their production helps keep prices low and would ease the transition to a green economy.

“We’re acting in parallel with other economies around the world that recognize that this is a challenge that we all face,” Trudeau said of the new tariffs. “Unless we all want to find ourselves in a race to the bottom, we have to stand up.”

Canada will begin a 30-day consultation on possible tariffs on Chinese batteries, battery components, semiconductors, critical minerals, metals and solar panels, according to Deputy Prime Minister Chrystia Freeland.

“China is pursuing a deliberate policy of overcapacity and oversupply, which is designed to cripple our own industry,” Freeland said. “We simply will not allow that to happen to our electric vehicle sector, which has shown so much promise.”

China warns of economic fallout

According to the Chinese embassy, ​​Ottawa has ignored Beijing’s repeated concerns and is now taking a step that will harm trade and economic relations.

“This decision is typical of trade protectionism and is politically motivated, violates World Trade Organization (WTO) rules and runs counter to Canada’s traditional image as a global champion of free trade and climate change mitigation,” the embassy said in an emailed statement. “China will take all necessary measures to protect the legitimate rights and interests of Chinese companies.”

Canada aligns its trade strategy with that of the United States

Canada “had to side with the United States, when you think about the economic integration we have with the United States. More than 75% of our exports go to the United States,” said Guy Saint-Jacques, a former Canadian ambassador to China.

Since China can import barley and pork from other countries, Saint-Jacques warned that Canada could face retaliation from China in other sectors.

After all, “China will want to send a message,” he commented.