Canada Imposes Tariffs on Chinese EVs and Steel Imports

Canada has imposed tariffs on electric vehicles (EVs) and steel imports from China, aiming to counter what it views as unfair trade practices. This move is part of a broader strategy to protect Canadian industries and address concerns about China's influence on global trade. The tariffs are expected to impact international trade relations and could lead to further economic tensions between the two nations.

Canada, which is an economy driven by exports and highly dependent on trade with the U.S., is closely monitoring actions by the Biden administration. The U.S. government is considering significantly increasing tariffs on Chinese electric vehicles (EVs), batteries, solar cells, and steel. These potential changes could have substantial implications for Canada’s trade dynamics and its economic relationship with both the U.S. and China.

Canada will introduce new tariffs on Chinese-made electric vehicles, aluminum, and steel to support domestic manufacturers and align with Western allies. The government announced a 100% levy on electric cars and a 25% levy on steel and aluminum. Prime Minister Justin Trudeau revealed this policy in Halifax, Nova Scotia, where his cabinet is holding meetings on the economy and foreign relations.

The tariffs follow a 30-day public consultation on Chinese EVs, aligning Canada with similar actions by the U.S. and EU. Trudeau emphasized that China isn’t playing by the same rules. The EV surtax, effective October 1, also covers certain hybrid vehicles, trucks, buses, and vans, adding to an existing 6.1% tariff on Chinese EVs. The aluminum and steel tariffs will be implemented on October 15. A preliminary list of goods was released, with public comments accepted until October 1.

Trudeau highlighted Canada’s efforts to become a global leader in automotive innovation, while criticizing China for unfair trade practices that undermine Canadian industries and workers. The government also launched a new consultation on sectors like batteries, semiconductors, and critical minerals. Canada, heavily reliant on U.S. trade, has been closely observing the Biden administration’s tariff measures against Chinese products. The Canadian auto industry, which exports most of its vehicles to the U.S., is deeply integrated with its American counterpart.

Finance Minister Chrystia Freeland, a strong advocate for a tougher stance on Chinese vehicle imports, announced public consultations in June to address unfair competition from China’s state-directed overcapacity. Freeland reiterated these concerns, citing China’s poor labor and environmental standards as reasons for Canada’s new policy. Additionally, the government will limit EV incentives to products made in countries with free-trade agreements with Canada, and the new tariffs will be reviewed within a year of implementation.

China’s embassy in Ottawa criticized the tariffs as trade protectionism and inconsistent with Canada’s stance on free trade and climate action. The embassy defended China’s EV development as driven by innovation and market competition and warned of measures to protect Chinese businesses. Canada has experienced retaliation from China before, such as restrictions on Canadian canola imports following the arrest of Huawei executive Meng Wanzhou. The value of Chinese EV imports to Canada surged last year, but the Canadian government is more concerned about the potential influx of cheaper Chinese cars, as companies like BYD plan to enter the market.

Trudeau also faced pressure from the Canadian auto and steel industries, which argue that China’s lower labor standards result in cheaper EVs that threaten Canadian jobs. The government has also invested heavily in EV and battery plants from allied countries, offering significant subsidies to manufacturers like Stellantis, Volkswagen, and Honda. Steel and aluminum producers have also urged the government to limit China’s market access, accusing China of flooding global markets with cheap products and endangering Canadian jobs. Catherine Cobden, CEO of the Canadian Steel Producers Association, reinforced these concerns, stating that China doesn’t follow fair trade rules.

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Source: autonews‍