Trudeau says Canada will slap big tariffs on Chinese-made EVs
100% surtax to be levied on all EVs made in China and sold in Canada; China expresses 'firm opposition'
Prime Minister Justin Trudeau announced Monday Canada will impose punitive tariffs on Chinese-made electric vehicles — copying a similar initiative that the U.S. is already pursuing to stop a flood of what's been described as unfairly state-subsidized cars.
Trudeau made the announcement at the federal cabinet retreat in Halifax where ministers are meeting to craft a strategy for the year ahead — the last year before an expected federal election in October 2025.
Amid industry pressure to copy the U.S. program, Trudeau said a 100 per cent surtax will be levied on all Chinese-made EVs, effective Oct. 1. The tariff would effectively double the price of imported vehicles, as it is expected most of the tax would be passed on to consumers.
Ottawa is following through now, Trudeau said, to "level the playing field for Canadian workers" and allow Canada's nascent EV industry to compete at home, in North America and globally.
Separately, Trudeau also announced Monday the federal government will apply a 25 per cent surtax on imports of steel and aluminum products from China, effective Oct. 15.
"Actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian auto and metal workers. So, we're taking action to address that," Trudeau said.
The tariff will apply to electric and certain hybrid passenger automobiles, trucks, buses and delivery vans.
Chinese brands like BYD are not a major player in Canada's EV market right now but imports from China have exploded in recent years as Tesla switched from U.S. factories for its Canadian sales to its manufacturing plant in Shanghai.
The new tariff will apply to those Shanghai-made Teslas that are sold in Canada — a development that is expected to force the U.S. automaker to supply the Canadian market with vehicles made at one if its other plants in the U.S. or Europe instead.
China warns of consequences
China lashed out at Canada for imposing the tariffs and suggested there could be consequences to come.
In a media statement, a spokesperson for the Chinese embassy in Canada said the country "expresses strong dissatisfaction and firm opposition to this."
"This move will undermine the normal economic and trade cooperation between China and Canada. It harms the interests of Canadian consumers and enterprises, and is not conducive to Canada's green transformation and global efforts to combat climate change," the spokesperson said in a written statement in Chinese and translated by CBC News.
Trudeau and his cabinet heard from Jake Sullivan, Biden's national security adviser, late Sunday during a surprise stopover before his trip to China.
Sullivan told reporters that the U.S. would like its partners to adopt a co-ordinated approach to Chinese EVs.
In a background briefing with reporters, a senior government official said Canada is not enacting these tariffs because of U.S. pressure.
The official said the government has been studying the issue for months — back to before the U.S. announcement of its tariffs in May – and has long been concerned about the prospect of Chinese automakers flooding North America with heavily subsidized cars that are made in a country with poor labour and environmental standards.
Deputy Prime Minister Chrystia Freeland also framed the tariff decision as one made to protect the government's substantial investment in domestic electric vehicle manufacturing.
Ottawa has earmarked tens of billions of dollars to support the construction and production of EVs at planned sites like the new Stellantis facility in Windsor, Ont., and a Volkswagen factory near London, Ont., among others.
"The reality is China has an intentional state-directed policy of overcapacity and oversupply designed to cripple our own industries," Freeland said.
"And we will simply not allow that to happen," she said. "We will do what the national interest, what Canadian workers require."
National association applauds government's stand
Flavio Volpe, the president of the Automotive Parts Manufacturers' Association who lobbied Ottawa to follow through with matching the U.S. tariffs, said the Canadian government has "stepped up again for the Canadian automotive sector."
"It's very important for us to have a level playing field. The Chinese are very good at what they do, but what they do also includes breaking the rules," he said.
The announcement is facing pushback from some climate change activists who want to get Canadians into EVs regardless of where they're made to help the country achieve its emission reduction targets.
They say the transition to a carbon-free future will be more costly and difficult as a result of Chinese tariffs like these ones.
"Unfortunately, Canada made a decision today that will result in fewer affordable electric vehicles for Canadians, less competition and more climate pollution," said Joanna Kyriazis, director of public affairs at Clean Energy Canada.
"Not only could today's announcement have a chilling effect on future EV sales, it could drive up EV prices and slow adoption in the near-term as well," Kyriazis said.
Volpe addressed the climate concerns saying Chinese-made EVs — built in factories largely powered by coal-fired power plants — are not as green as those made elsewhere.
"Sure, what the Chinese are doing is selling us green products that help fulfil some of our EV mandates, but they do it in a regulatory environment where they forgo any stewardship of the environment," he said.
Freeland was even more blunt in her assessment of the Chinese industry, saying it's one that is "built on abysmal labour standards and it is built on abysmal environmental standards."
She said Canada's push for an EV revolution — the government has mandated that all new cars sold in Canada must be zero-emission by 2035 — will not be a policy "based on abuse of workers in China, based on pollution in China."
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