Shanghai Gigafactory 3 paint shop. Source: Tesla
Canada has followed the lead of the United States and the European Union, and will slap a 100 per cent tariff on all Chinese-made electric vehicles (EVs), taking aim at what it says is an “intentional, state-directed policy of overcapacity” and poor labour and environmental standards.
The new tariffs, which will go into effect on October 1, 2024, will apply a 100 per cent surtax on all Chinese-made EVs – including all battery electric vehicles and certain hybrid passenger cars, trucks, buses, and delivery vans.
This new tariff will be piled on top of the existing 6.1 per cent import tariff that currently applies to EVs produced in China and imported into Canada.
A government spokesperson told Reuters that this new tariff would also apply to electric vehicles made in China by US EV company Tesla, and to its main competitor BYD, which is poised to launch into that market later this year.
The new tariff was announced alongside a 25 per cent surtax on Chinese imports of steel and aluminium products, which will go into effect on October 15, 2024.
“Canada is home to the talented workers, raw materials, clean electricity, and specialized production capabilities needed to build electric vehicles, and that is why our EV supply chain potential is ranked first in the world,” said Chrystia Freeland, deputy Prime Minister and minister of finance.
“Canadian workers and critical sectors, including steel and aluminium, however, are facing an intentional, state-directed policy of overcapacity, undermining the 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.”
The announcement follows hot on the heels of similar tariffs on Chinese EV imports in both the United States and the European Union.
In May, the United States announced that it would increase the tariff rate on EV imports from China from 25 per cent to 100 per cent. The tariff increase was billed as an effort to “protect American workers and businesses from China’s unfair trade practices”.
However, the Biden-Harris administration is expected to announce the final implementation of these tariff increases – which also included Chinese imports of semiconductors, steel and aluminium, solar cells, and batteries, battery materials, and critical minerals – with many across US industry calling for the planned increases to be softened.
Similarly, the European Commission announced in June that it would begin to apply provisional countervailing (anti-subsidy) duties on Chinese-made EVs.
This was confirmed in August after a period of feedback, applying differing duty rates per company at a : 17.4 per cent for BYD, 19.3 per cent for Geely, 36.3 per cent for SAIC, 21.3 per cent for other cooperating companies, and a flat 36.3 per cent for all other non-cooperating companies.
Tesla was granted an individual duty rate of only 9 per cent.
As of writing, the European Union’s planned tariffs remain at the provisional stage and have not been finalised.
Unsurprisingly, China has repeatedly expressed its frustration at the slow drip of economic sanctions.
In May, a statement from Chinese foreign minister Wang Yi decried the United States’ decision to impose tariffs as “the most typical form of bullying in the world today!
“It shows that some people in the United States have reached the point of losing their minds in order to maintain their unipolar hegemony. The U.S.’s suppression of China does not prove that the U.S. is strong, but rather exposes that the U.S. has lost its self-confidence and is out of order.”
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.
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There's healthy competition, fierce competition, and then there is the Chinese "state driven aiming to decimate the opposition" type of competition, which we have with EVs.
Why not lower tariffs on ESG focused manufacturers that use a significant number of recyclable materials that are ethically sourced in factories using 100% renewables, recycled water, and so on. So, we "punish" the less environmentally concerned manufacturers.
There is little difference between Chinese investment in their battery, solar and EV industries and the US IRA. US and EU politicians calling out Chinese EV "overcapacity" conveniently forget that their own auto industry was complacent and failed to invest, or lobby for support to convert from an ICE industry to a BEV one. The result of these tariffs will be further complacency and slow development of an EV industry, and ultimately impact on the climate goals that have been set. Not a good move, in particular the punitive tariffs in the US and Canada.
In general, we don't care how your gov't pisses away your taxpayers $$ locally -- eg, GM bailout -- but the moment that it's used promote "export" to hurt international trade or cripple "foreign competition" in local market -- a practice known as "local content requirement" -- it becomes everyone's problem. These are the only subsidies prohibited under the WTO SCM (Subsidies & Countervailing Measures) Agreement.
China's practice of banning foreign competition, especially the Japanese & Korean battery competitors since 2015; subsidizing local overcapacity; then flooding markets aborad with export subsidies violate all these rules.
WAY too sensible for the current administration—that would require calculation, discernment, and political will.
Wrong headed to blame just one govt.
This has been brewing for 60+ years. Mere coincidence that the discovery of GHG and OPEC happened at the same time.
Maybe, Australia will get an influx of the chinese BEV’s, that north america is shutting out.
The influx, if it happens when the doors shut in Canada, in October, will be only a few years late…
Just so long as they make them in RHD
Since the death of our local car manufacturing industry we have little choice. Producing affordable RHD vehicles is generally seen as a burden.
When you're a vassal state you do what you're told. Lucky for Australia we no longer have auto manufacturing or we'd be given our instructions also. Submarines anyone?
Lapdog more like.
Better reflects our position as Labradoodle.
Stupid!
It's fascinating to me that western manufacturers are usually described as something like "expanding into new export markets", whereas Chinese manufacturers get tagged with something like "flooding foreign markets with their oversupply".
Welcome to neo capitalism.
Leave your morals at the door.
Is Canada protecting local EV manufacturers by implementing the tariff? If there are no local manufacturers then I don't see the point - they are just making vehicle purchases more expensive for Canadians without any benefit beyond raking in money for the government.
Trudeau needs only a bike.
You make a very good point.
With no local manufacturers left it is mere churlishness to complain about where they are imported from.
They are definitely protecting their own interest -- local auto manufacturing. They are also casting their vote to protect their consumers' long-term interests, contrary to myoptic activists who are demanding Chinese EVs NOW.
Ok but what cars do they manufacture?
Maybe Canada is addicted to ICE?
Update.
I did some rudimentary research and the Canadian jobs they are protecting are 'future' jobs. They make no EVs.
They plan to. Don't hold your breath waiting.
Just can't keep up with China.