Canada Considering Tariffs on Chinese EVs, Launches Consultation

Canada Considering Tariffs on Chinese EVs, Launches Consultation
Deputy Prime Minister and Minister of Finance Chrystia Freeland is seen during a news conference, Tuesday, June 4, 2024 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Matthew Horwood

Ottawa is considering imposing tariffs on Chinese electric vehicles (EVs) as part of its 30-day consultation in response to “unfair competition” from China, the deputy prime minister has announced.

“Chinese producers are quite intentionally generating a global oversupply that undermines EV producers around the world, including here in Canada,” Deputy Prime Minister Chrystia Freeland said during a June 24 press conference in Vaughan, Ont.

Ms. Freeland said the federal government will launch the 30-day consultation on July 2 to receive potential policy responses in order to protect 550,000 Canadian jobs related to the sector. Ottawa will be considering policy actions such as a surtax on imports of Chinese EVs under section 53 of the Customs Tariff, changing which cars are eligible for Canada’s existing federal incentives for the Zero-Emission Vehicles program, and “potentially broader restrictions in Canada.”

Ms. Freeland accused Beijing of having an “intentional state-directed policy” of over-producing EVs, which is undermining Canada’s EV sector. She also said these Chinese vehicles are manufactured with poor labour and environmental standards.

“Launching these consultations will help us work collaboratively with unions, with industry, and with all levels of government to develop options to make sure that Canada does not become a dumping ground for Chinese over-supply,” Ms. Freeland said.

US and EU Tariffs

Due in part to increases in government subsidies, China has become a major supplier of EV vehicles and batteries in recent years. Nearly 80 percent of all lithium-ion batteries for electric vehicles globally came from China in 2021 and, by 2023, nearly one in five EVs sold in Europe had been manufactured in China.
In response to the growing trend, U.S. President Joe Biden announced in May he would hike tariffs on Chinese EVs from 25 percent to 100 percent, while also increasing tariffs on lithium-ion batteries and certain other clean energy products. The European Union also announced it would raise tariffs on Chinese EVs to 38.1 percent.

When asked by reporters about U.S. and European tariffs on Chinese EVs, Ms. Freeland said Ottawa is in consultations with unions and all levels of government to determine the right path forward.

“We’re looking at it closely, we’re going to do it quickly,” she said. “All of our tools, including our most powerful trade tool, section 53, are on the table.”

Ontario Premier Doug Ford has also called on Ottawa to put a 100 percent tariff on Chinese EVs, saying Beijing’s imports are harming Canadian jobs. He said China is “taking every advantage” of its own “low labour standards and dirty energy,” to flood vehicle markets with cheap vehicles.
Canada has brought in more than $46 billion in investments for 13 electric vehicle, battery, and battery component manufacturing projects since 2020, providing subsidies for factories in cities like St. Thomas and Windsor.