Canada considers imposing surcharge on Chinese electric vehicles

FILE – Deputy Prime Minister and Minister of Finance Chrystia Freeland holds a press conference in Ottawa, Ontario, Tuesday, April 16, 2024. The Canadian government is exploring the possibility of imposing a surtax on imports of electric vehicles manufactured in China . (Sean Kilpatrick/The Canadian Press via AP, file)

TORONTO — The Canadian government is studying the possibility of imposing a surtax on imports of electric vehicles manufactured in China.

A 30-day consultation on the issue will begin July 2 to counter what Deputy Prime Minister Chrystia Freeland said Monday was a clear effort by Chinese companies to generate global oversupply.

Canada’s move comes weeks after the United States and the European Commission announced plans to impose higher import tariffs on Chinese electric vehicles this summer.

READ: Chinese Prime Minister calls to “oppose decoupling” at economic forum

“Our automotive sector supports nearly 550,000 good-paying jobs in Canada,” Freeland said. “Canadian workers and the auto sector face unfair competition from China’s intentional state-led overcapacity policy, which undermines the ability of Canada’s electric vehicle sector to compete in domestic markets and global.

The consultation will aim to determine what is driving China’s boom in electric vehicle exports, including unfair market practices as well as labor and environmental standards.

In addition to a surcharge, the consultation will examine whether Canada should change which cars qualify for the federal rebate on the purchase of electric vehicles worth up to C$5,000 ($3,661) per vehicle.

READ: China warns EU tariffs on electric vehicles would ‘harm’ Europe’s interests

It will also examine the advisability of expanding investment restrictions in Canada.

Currently, the only Chinese-made electric vehicles imported into Canada are from Tesla, manufactured at the company’s Shanghai factory. No Chinese brand electric vehicles are sold or imported at the moment.

Freeland said Canada would act in concert with its allies in the United States and the European Union. She noted that North America has an integrated auto sector and said her government would ensure Canada does not become a dumping ground for Chinese oversupply.

US President Joe Biden said Chinese government subsidies for electric vehicles and other consumer goods ensure Chinese companies won’t have to make a profit, giving them an unfair advantage in global trade.