Canada imposes new tariffs on Chinese EVs and industrial metals

A number of analysts expect China to retaliate against Canada after its federal government hiked tariffs on Chinese-made electric vehicles (EVs) and other materials.

The new tariffs of 100% on Chinese EVs and 25% on Chinese steel and aluminium will bring Canada in line with the increases on the same imports announced by the US in May.

In announcing the tariffs, which come into effect from 1 October 2024, the government said they were intended to protect Canadian manufacturers and jobs.

Unfair competition

Canada’s auto manufacturing industry directly supports over 125,000 jobs, with the nation’s EV supply chain potential ranked first in the world.

Similarly, Canada’s steel and aluminium sectors support over 130,000 jobs across the country.

“However, Canadian auto workers and the auto sector currently face unfair competition from Chinese producers, who benefit from non-market policies and practices,” Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland said.

“Recent consultations with stakeholders have confirmed that exceptional measures are required to address this extraordinary threat.”

Steel and aluminium also hit

The government also confirmed it intends to apply a 25% surtax on imports of steel and aluminium products from China, with a final list of the subject goods to be announced by 1 October 2024 and the surtaxes taking effect a fortnight later.

Additionally, the government revealed it will launch a second 30-day consultation concerning other sectors critical to Canada’s future prosperity including batteries and battery parts, semiconductors, solar products and critical minerals.

“Canadian workers and critical sectors including steel and aluminium are facing an intentional, [Chinese] state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets.”

“That is why our government is moving forward with decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners.”

Protecting workers

Minister of Transport Pablo Rodriguez said the government is committed to meeting its zero-emission vehicle sales targets and building a green economy that works for every generation.

“However, the path to net-zero emissions won’t be achieved without Canadian workers,” he added.

“Today’s announcement ensures that our iZEV program protects our workers, critical sectors and Canada’s economy.”

Mixed reception

Not everyone welcomed the news, with Clean Energy Canada director of public affairs Joanna Kyriazis critical of the move.

“The federal government had an opportunity to take a balanced approach to a complicated issue: one that considered not only the priorities of traditional automakers and Canada’s local industry but also the needs of affordability-constrained Canadian consumers and our climate.”

“Canada could have applied a reasonable tariff that considered multiple interests—Europe, for example, is applying tariffs that range from 36% on cars from SAIC Motor to 17% on BYDs to 9% on Chinese-made Teslas.”

“Unfortunately, Canada made a decision today that will result in fewer affordable EVs for Canadians, less competition and more climate pollution.”