Consultations Initiate on Tariffs for Chinese-Made Electric Vehicles: Federal Discussions Underway

Canada Evaluates Potential Tariffs on Chinese Electric Vehicle Imports

The Canadian government has announced a 30-day public consultation period to discuss the potential imposition of tariffs on electric vehicle (EV) imports from China.

Concerns are intensifying about the influx of Chinese EVs into the North American market, particularly Canada.

“Through this consultation, we aim to explore measures to safeguard our workforce, ensure competitive equity, and curb the risk of Chinese transshipment or supply gluts due to unfair trade tactics,” stated Chrystia Freeland, Deputy Prime Minister and Minister of Finance, in a government release.

Similar measures are being adopted in other markets. For instance, the United States recently announced a plan to implement a 100% tariff on Chinese-made passenger EVs beginning August 1.

Meanwhile, the European Commission has introduced provisional countervailing duties of up to 38.1% on such imports, effective from July 4, with definitive duties to be decided in the autumn.

Canada is now considering whether to adopt comparable protective measures.

“Chinese manufacturers are causing a global surplus that threatens to undermine the profitability of EV manufacturers worldwide, including in Canada,” the government noted.

Accusations against Chinese trade practices include inadequate standards in labor, environmental protection, and policies promoting excessive output.

The consultation will run until August 1, 2024.

Details of the Consultation

The focus will be on possibly applying a surtax on passenger EVs from China, pursuant to Section 53 of the Customs Tariff, which permits levying additional duties to mitigate adverse effects on Canadian industries.

To date, the only Chinese-branded EVs available in Canada are Teslas produced in Shanghai and Polestar models, both currently subject to a 6% Canadian customs tariff. These Teslas still qualify for the federal iZEV purchase rebate.

The government will also consider amending the criteria for the iZEV rebate and implementing investment limits.

Another critical area of the consultation will be cybersecurity and data privacy, with an emphasis on safeguarding Canadian interests against potential risks from connected vehicles that use Chinese technology for data collection.

Canada’s Ambitions in the EV Sector

Amid growing global competition, Canada is keen to advance its domestic EV industry.

“Canada boasts a strong automotive production legacy that has enriched communities and the economy for generations. As we transition towards cleaner energy and air, we’ve attracted substantial investments aimed at bolstering our EV manufacturing capabilities,” mentioned François-Philippe Champagne, Minister of Innovation, Science and Industry.

This year’s federal Budget 2024 includes plans for a new 10% EV Supply Chain Investment Tax Credit to encourage investment in various segments of the EV production chain.