Prime Minister Justin Trudeau announced Monday that Canada will impose punitive tariffs on Chinese-made electric vehicles, mimicking a similar effort already underway in the United States to stop a flood of cars that are allegedly unfairly government-subsidized.
Trudeau made the announcement at a federal cabinet meeting in Halifax, where ministers are meeting to map out strategy for the year ahead, the final year before a federal election scheduled for October 2025.
Faced with pressure from industry to copy the U.S. program, Trudeau said he would impose a 100% surcharge on all Chinese-made EVs starting Oct. 1. The tariffs would effectively double the price of imported cars, as most of the tax is expected to be passed on to consumers.
Prime Minister Justin Trudeau said Canada would impose 100% tariffs on Chinese-made electric vehicles after the United States announced similar measures.
Trudeau said the Canadian government is now putting the plan into action to “create a level playing field for Canadian workers” and ensure Canada’s nascent EV industry can compete domestically, North America and globally.
Separately, Prime Minister Trudeau announced on Monday that the federal government will impose an additional 25 per cent tax on steel and aluminum imports from China starting Oct. 15.
“Countries like China have chosen to gain an unfair advantage in the global marketplace, threatening the security of Canada’s critical industries and laying off dedicated Canadian auto and metals workers, and that’s why we’re taking steps to address this,” Trudeau said.
The tariffs apply to electric and certain hybrid passenger cars, trucks, buses and delivery vans.
Chinese brands like BYD are not major players in the Canadian EV market for now, but imports from China have surged in recent years after Tesla switched its Canadian sales from its U.S. factory to a manufacturing facility in Shanghai.
The new tariffs will apply to Shanghai-made Tesla cars sold in Canada, a move that is expected to force the U.S. automaker to supply the Canadian market with vehicles made in other factories in the United States or Europe.
China warns of consequences
China has strongly criticised Canada for imposing the tariffs and hinted at possible future repercussions.
“China expresses strong dissatisfaction and resolute opposition to this,” a Chinese foreign ministry spokesman said in a media statement.
“This measure undermines normal economic and trade cooperation between China and Canada, harms the interests of Canadian consumers and businesses, and does not support a greener Canada or global efforts to combat climate change,” the spokesman said.
Late Sunday, Trudeau and his cabinet members heard from Biden’s national security adviser, Jake Sullivan, during a surprise stop ahead of a trip to China.
Sullivan told reporters the United States wants partner countries to adopt a coordinated approach to Chinese EVs.
A senior Canadian government official told reporters in a background briefing that Canada was not imposing the tariffs in response to U.S. pressure.
The official said the government had been looking at the issue for months before the U.S. tariffs were announced in May and has long been concerned about the possibility of Chinese automakers flooding North America with heavily subsidized cars made in countries with poor labor and environmental standards.
Deputy Prime Minister Chrystia Freeland also said the tariffs were intended to protect the government’s significant investment in domestic electric vehicle manufacturing.
The Canadian government is allocating tens of billions of dollars to support the construction and production of electric vehicles at planned sites such as a new Stellantis factory in Windsor, Ontario, and a Volkswagen plant near London, Ontario.
“The reality is that China has engaged in a deliberate, state-driven policy of overcapacity and overcapacity designed to cripple its own industry,” Freeland said.
“And we will never allow that to happen,” she said. “We are going to do what is in the national interest and what Canadian workers are demanding.”
National Association praises government’s stance
Flavio Volpe, president of the Automotive Parts Manufacturers Association, which lobbied the Canadian government to impose tariffs on par with the U.S. tariffs, said the government had “once again stepped up for our auto industry.”
“For us it’s very important to have a level playing field. The Chinese are very good at what they do, but their job involves breaking the rules,” he said.
The announcement has drawn backlash from climate change activists who want Canadians to drive EVs, regardless of where they are made, to help meet Canada’s emissions reduction goals.
They say tariffs like these from China will make the transition to a carbon-free future more costly and difficult.
“Unfortunately, Canada made a decision today that will mean fewer affordable electric vehicles for Canadians, less competition and more climate pollution,” said Joanna Kyriazis, director of public affairs at Clean Energy Canada.
“Today’s announcement not only pours cold water on future EV sales, but could also lead to higher EV prices and slower near-term adoption,” Kyriazis said.
Volpe also mentioned climate change, saying Chinese-made EVs, which are built in factories that are largely powered by coal-fired power plants, are not as environmentally friendly as those made in other countries.
“Certainly what China is doing is selling environmentally friendly products that help meet some of our EV mandates, but they’re doing it in a regulatory environment that gives up all environmental control,” he said.
Freeland offered a more blunt assessment of the Chinese industry, saying it is “built on terrible labor standards and terrible environmental standards.”
She said the EV revolution being promoted by the Canadian government — which has mandated that all new cars sold in Canada must be zero-emissions by 2035 — is not a policy “based on the mistreatment of Chinese workers and Chinese pollution.”
