Canada to impose 100% tariffs on Chinese electric vehicles due to 'unfair' competition

Canada announced Monday that it would impose 100% tariffs on electric vehicles made in China, as well as a 25% tariff on steel and aluminum imports from China.
Canada said its electric vehicle, steel and aluminum industries face “unfair” competition from China, and that the new measures were aimed at “leveling the playing field for Canadian workers.”

Canada announced Monday it will impose 100% tariffs on electric vehicles made in China, following in the footsteps of the United States and the European Union, which have imposed taxes over concerns about unfair subsidies.

Canada already imposes a 6.1% tariff on electric vehicles made in China and imported into Canada, the government announced Monday. The 100% tariff will take effect on October 1.

The country will also impose a 25% tariff on imports of steel and aluminum made in China, starting October 15. China is Canada’s third-largest steel importer, according to the Canadian Steel Producers Association.

Canada’s electric vehicle, steel and aluminum industries are facing “unfair competition” and trade practices from China, the government’s finance department said. The U.S. and EU have made similar allegations, citing China’s “overcapacity,” which China has called “groundless.”

Canada said the new measures are aimed at “leveling the playing field for Canadian workers” and enabling Canadian producers of electric vehicles, steel and aluminum to be competitive domestically and globally.

These measures will be reviewed one year after their date of entry into force and may be extended or supplemented by additional measures.

The move comes as the Biden administration announced a 100% tariff on Chinese electric vehicles in May. The EU also imposed higher tariffs on Chinese-made electric vehicles in July, though it reduced some of its planned tariffs on Chinese-made Tesla electric vehicles and other Chinese electric vehicle makers last week.

Vincent Chan, China strategist at Aletheia Capital, told CNBC’s “Street Signs Asia” on Tuesday: that Canadian tariffs could hurt China’s electric vehicle growth momentum, but “will not eliminate it entirely.”

In a statement Monday, a spokesperson for the Chinese Embassy in Canada said China expressed “deep dissatisfaction and resolute opposition” to the move, adding that it “violates WTO rules” and “will harm trade and economic cooperation” between China and Canada. The spokesperson added that China would take necessary measures to protect its companies.

“I would like to stress that the rapid development of China’s electric vehicle industry is the result of persistent technological innovation, well-established industrial and supply chains, and full market competition,” the spokesperson said, adding that China’s electric vehicle industry does not rely on government subsidies.

Chinese electric vehicle maker BYD opened its first bus assembly plant in Canada in June 2019 and launched electric buses in Toronto. However, Chinese brands are still not a major player in the country, Chinese state media Global Times reported in June.

Auto imports from China to Canada’s largest port, Vancouver, jumped 460% year-on-year to 44,356 in 2023, when Tesla began shipping electric vehicles made at its Shanghai factory to Canada, according to data cited by Reuters. Tesla did not immediately respond to CNBC’s request for comment.

Canada will also launch a review of other industries critical to the country, such as batteries, semiconductors and solar products.

– CNBC’s Sonia Heng contributed to this report.