In a significant move to protect its domestic automotive industry and align with its Western allies, Canada has announced a 100% tariff on Chinese-made electric vehicles (EVs) and a 25% tariff on Chinese steel and aluminum imports. Canadian Prime Minister Justin Trudeau announced the decision on August 26, 2024, stating, ‘I think we all know that China is not playing by the same rules’.The tariffs on EVs will take effect on October 1, 2024, and will apply to electric and some hybrid passenger cars, trucks, buses, and delivery vans. The steel and aluminum tariffs will be implemented on October 15, 2024. This move follows similar actions by the United States and the European Union, with the US having imposed a 100% tariff on Chinese-made EVs in May 2024.The Canadian government’s decision is part of a broader strategy to position the country as a key player in the global EV supply chain. Trudeau emphasized, ‘We are transforming Canada’s auto sector to be a global leader in tomorrow’s vehicles’. The move comes after Canada secured billions of dollars in agreements with European automakers to establish a production hub.Deputy Prime Minister and Finance Minister Chrystia Freeland stated that the government is taking ‘decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners’. The government has also announced a 30-day consultation on imposing additional tariffs on other sectors, including batteries, semiconductors, solar products, and essential minerals.While the decision is aimed at protecting domestic industries, it may have implications for Canada-China relations. Currently, the only Chinese-made EVs imported to Canada are Tesla models from the Shanghai plant. The move could potentially lead to retaliation against Canadian agricultural exports.As global economies grapple with China’s industrial policies and state subsidies, this coordinated approach by Western nations signals a significant shift in international trade dynamics, particularly in the rapidly evolving EV market.
Key points
- Canada imposes 100% tariff on Chinese-made EVs and 25% tariff on Chinese steel and aluminum.
- The move aligns with recent actions by the US and EU to protect domestic industries.
- Canada aims to position itself as a key player in the global EV supply chain.
- The decision may have implications for Canada-China relations and international trade dynamics.
