Canada to hit China with tariffs on electric vehicles, aluminum, steel

Canada is moving to match the United States with new tariffs on electric vehicles made in China in a bid to keep the cars from getting a significant foothold in the North American market.

Prime Minister Justin Trudeau outlined the plan at the federal cabinet retreat in Halifax on Monday, promising to increase import taxes on Chinese-made EVs to 106.1 per cent on Oct. 1, up from 6.1 per cent.

Tariffs on Chinese-made steel and aluminum products will go to 25 per cent on Oct. 15, with a final list of which products will be affected expected Oct. 1.

“We are transforming Canada’s automotive sector to be a global leader in building the vehicles of tomorrow, but actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian autos and metal workers,” Trudeau said.

“So we’re taking action to address that.”

Chinese brands are not a major player in Canada’s EV market right now, but imports from China have exploded in the last year after Tesla switched from U.S. factories for its Canadian sales to its manufacturing plant in Shanghai.

Chinese EV giant BYD, which stands for Build Your Dreams, established a Canadian corporate entity last spring and has indicated it intends to try and enter the Canadian market as early as next year.

It has seen exponential growth in Europe, which is also planning new tariffs on electric vehicles made in China, though they will end up being less than half the Canadian and U.S. tariffs if the European bloc approves them in October.

A senior government official who briefed reporters on background at the cabinet retreat said the government has been in talks with Tesla about switching the cars intended for the Canadian market from China to its other plants.

U.S. President Joe Biden quadrupled the import tariff on Chinese-made EVs to 100 per cent in May, citing unfair subsidies from Beijing to Chinese EV makers.

The U.S. commerce department is also investigating national security concerns related to internet-connected vehicles from China and other countries.

The U.S. hiked tariffs on a lengthy list of other Chinese products in May, including solar cells, computer chips, medical equipment and lithium ion batteries.

To impose tariffs, Canada must undertake a consultation process, which it did for EVs and steel and aluminum in July.

Trudeau said the government is looking at further measures, including imposing tariffs on computer chips and solar cells, to protect Canadian workers from “unfair” non-market practices by China.