Canada imposes tariffs on Chinese-made electric vehicles

2024-08-26 21:12:33

Canada is preparing to join the United States in imposing new tariffs on Chinese-made electric vehicles in an effort to prevent them from gaining a foothold in the North American market.

Prime Minister Justin Trudeau outlined the plan at a federal cabinet retreat in Halifax on Monday, pledging to increase import duties on Chinese-made electric vehicles to 106.1 per cent.^yes in October, compared to 6.1% previously.

Starting October 15, tariffs on Chinese steel and aluminum products will be increased to 25%. The final list of affected products is expected to be announced on October 1.^yes October.

“We are transforming Canada’s auto industry to become a global leader in building the cars of the future, but players like China are choosing to give themselves an unfair advantage in the global marketplace, compromising the security of our important industries and displacing dedicated Canadian auto and metal industry workers,” Trudeau said.

“So we are taking steps to address that,” he added.

Emerging Brands

Chinese brands are not currently major players in Canada’s electric vehicle market, but imports from China surged last year after Tesla moved its U.S. factory to Canadian sales and focus on its Shanghai manufacturing plant.

Chinese electric vehicle giant BYD established a commercial entity in Canada last spring and said it intends to enter the Canadian market as early as next year.

It’s growing exponentially in Europe, which also plans to impose new tariffs on Chinese-made electric vehicles, though they would have to be more than half less than Canada and the United States’ if the EU approves them in October.

A senior government official briefing reporters on the sidelines of a Cabinet retreat said the government is in talks with Tesla to move cars destined for the Canadian market from China to Tesla’s other factories.

The American Way

U.S. President Joe Biden announced in May that he plans to quadruple tariffs on electric vehicles that are 100% made in China, arguing that Beijing provides unfair subsidies to Chinese electric vehicle manufacturers. The tariffs will take effect on the 1^yes in August, but was postponed to September.

The Commerce Department is also investigating national security issues related to connected cars in China and other countries.

In May, the United States raised tariffs on a long list of other Chinese products, including solar cells, computer chips, medical devices and lithium-ion batteries.

In order to impose tariffs, Canada must go through a consultation process, which it did in July on electric vehicles, steel and aluminum.

Trudeau said the government was considering other measures, including tariffs on computer chips and solar cells, to protect Canadian workers from China’s “unfair” practices.

The situation for some of these products is trickier than for electric vehicles because Canada actually imports them from China and must tread carefully to avoid disrupting the supply chain on which its own electric vehicle industry depends.

In late June, Deputy Prime Minister and Finance Minister Chrystia Freeland announced the start of the process to impose new import taxes on Chinese-made electric vehicles.

“The reality is that China is deliberately pursuing a state-led policy of overcapacity and oversupply designed to undercut our own industry,” Minister Freeland said on Monday.

“Talking to the steel industry, talking to the aluminum industry, seeing how well this has worked, we simply will not allow this to happen to our electric vehicle industry, which is so promising and in which we’ve already made effective investments,” she continued.

Canada has enacted 18 different trade remedy measures against China’s unfair steel-related trade practices, but China’s exports of steel products to Canada have doubled since 2020.

“We are here because we want to protect our workers. We want to protect the industry, we want to protect the generational investment that we have seen,” Innovation, Science and Industry Minister François-Philippe Champagne said in Halifax on Monday. “We know that today Canada is the envy of the world in the production of electric vehicles. We have built a very complete supply chain.”

Union and industry leaders satisfied

The announcement was warmly welcomed by the steelworkers union affiliated with the FTQ, which represents thousands of workers in the industry in Quebec.

“This is important for Quebec steel and aluminum jobs, but it’s also important from an environmental point of view. In fact, the carbon footprint of aluminum and steel produced here is much lower than that of aluminum and steel produced in China. Preventing Dumping China also means cleaning up the carbon footprint,” commented Dominic Lemieux, president of the Quebec steelworkers union.

The Steelworkers union recalled in a press release that nine of Canada’s ten aluminum smelters are located in Quebec, which use hydroelectric power to produce aluminum.

Unifor said it welcomed Canada imposing the same tariffs as the United States “to present a united front in support of the auto industry and the communities that benefit from it.” “We must all remember that cheapness comes at a very high price — the price of good jobs and Canadian communities,” the labor group said in a statement.

Additionally, leaders of the steel and aluminum industries “strongly supported” the federal government’s announcement.

“By taking this proactive approach to imposing tariffs on China, Canada is protecting our workers, their families and the communities that these important industries support,” Catherine Cobden, president and CEO of the Canadian Steel Producers Association, and Jean Simard, president and CEO of the Aluminum Association of Canada, said in a joint statement.

“Canada is strategically aligning with its CUSMA (Canada-United States-Mexico Agreement) trading partners to protect Fortress North America and deny becoming a point of entry for high-carbon steel and aluminum imports subject to unfair trade,” they added.

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