After US and EU, Canada too plans to impose new tariffs on Chinese EVs

Prime Minister Justin Trudeau’s government is preparing potential new tariffs on Chinese-made electric vehicles to align Canada with actions taken by the US and European Union, according to people familiar with the matter.

The government still has to make final decisions on how to proceed, but it’s likely to announce soon the start of public consultations on tariffs that would hit Chinese exports of EVs into Canada, according to officials who spoke on condition they not be identified.

Trudeau has been under increasing pressure at home and abroad to follow the lead of US President Joe Biden’s administration, which announced in May a plan to nearly quadruple tariffs on Chinese-manufactured electric vehicles, up to a final rate of 102.5%. The European Union said last week it plans to increase tariffs on Chinese EVs, taking those levies as high as 48% on some vehicles.

Western democracies are increasingly concerned about China’s overproduction of key goods, seeing it as an effort to dominate supply chains and undercut their own industries. Battery-electric vehicles have become a major target as Chinese firms such as BYD Co. move aggressively into global markets.

Earlier Thursday, Ontario Premier Doug Ford accused China of taking advantage of low labor standards and dirty energy to make inexpensive EVs. He called on Trudeau’s government to at least match the Biden tariffs. “Unless we act fast, we risk Ontario and Canadian jobs," he said on the social media platform X.

The number of cars arriving from China at the port of Vancouver rose more than fivefold last year, to around 44,400, after Tesla Inc. started shipping Model Y vehicles made in Shanghai to Canada. However, the Canadian government’s concern isn’t Tesla, but the prospect of cheap cars made by Chinese automakers eventually flooding the market.

Publicly, Trudeau and his cabinet ministers have said they’re monitoring what other countries are doing, but haven’t committed to new tariffs. The prime minister told reporters on Thursday he had “significant conversations" about Chinese production at the Group of Seven leaders’ summit in Italy last week.

A spokesperson for Finance Minister Chrystia Freeland said Canada is “actively considering next steps to counter Chinese oversupply," but didn’t address if tariffs are being prepared.

“China has an intentional, state-directed policy of overcapacity," Katherine Cuplinskas, Freeland’s press secretary, said in an email. “Protecting Canadian jobs, manufacturing, and our free trade relationships is essential."

Canadian auto industry groups have called on Canada to impose stiff tariffs. They’ve warned that Canada can’t afford to be offside with the US on this issue, given the upcoming review of the United States-Mexico-Canada free trade agreement. The US and Canada have tightly integrated auto supply chains, with parts and finished vehicles flowing across the border in huge quantities. The vast majority of Canada’s auto production is exported to the US.

However, Trudeau has moved carefully, given the possibility of Chinese trade retaliation. Some environmental groups argue that it’s most important to keep EV costs low to encourage higher consumer adoption.

Trudeau’s administration and Doug Ford’s government in Ontario have promised to pour billions into building a domestic industry for electric-vehicle manufacturing, from mining critical minerals for batteries all the way to assembling cars and light trucks.

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