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Canada may follow the example of the EU and the U.S., and impose import tariffs on Chinese electric vehicles, Reuters has reported, citing finance minister Chrystia Freeland.
“Chinese producers are quite intentionally generating a global oversupply that undermines EV producers around the world, including here in Canada,” Freeland said, adding the federal government would open a public consultation period of 30 days on the issue on July 2.
The European Union earlier this month announced additional tariffs on China-made electric vehicles in an attempt to stem the influx of cheap EVs from China that would undermine European car manufacturers. Arguably, the tariffs themselves could undermine European carmakers since their China-made cars would also be included in the tariff regime.
Under the new regime, Mercedes, Renault, and any other European carmakers with factories in China will, starting next month, pay an additional 21% import tariff, while Chinese carmakers will pay individually set tariffs of between 17% for BYD and 38%, the top rate, for SAIC, which the European Commission claimed had not cooperated with its investigation into Chinese EV subsidies.
The U.S. also imposed import tariffs on Chinese electric vehicles to protect local car manufacturers who, like their European peers are struggling to make their electric cars more affordable, and now Canada may follow.
China is Canada’s second-largest trading partner, Reuters noted in its report on the possibility of EV tariffs. Last year, imports of cars from China at Vancouver port rose by 460% on the year. The massive increase was to a significant extent the result of Tesla starting to export China-made cars to Canada.
Tariff action, however, risks prompting retaliation, as the EU found out when Beijing authorities informed it they had started an investigation into European imports of pork and pork byproducts, targeting the food industry, which is the only source of surplus in bilateral trade relations between Brussels and Beijing.
