Canada Considering New Tariffs, Investment Restrictions on Chinese EVs

Canada this week launched a 30-day consultation period as it decides whether to impose additional duties or take other measures against Chinese electronic vehicle imports. The consultations, which began July 2 and will run through Aug. 1, “seek views on potential policy responses,” Canada said, including new tariffs on a range of battery, plug-in hybrid and fuel cell electric vehicles.

Canada said Chinese producers are “generating a global oversupply that will erode the profit incentives of EV producers around the world, including in Canada.” The country said it’s looking to protect its auto workers and EV industry from “unfair trade practices, and prevent trade diversion resulting from recent action taken by Canadian trading partners.” The U.S. and the EU “have identified similar concerns” about China’s EV sector and “are taking steps to protect their markets,” Canada said (see 2405140008 and 2406120008).

Along with comments on possible tariffs, Canada is also seeking feedback on possible investment restrictions, including on Chinese investments in Canada-based factories; changes to the country’s incentives for zero-emission vehicles; cyber, data or national security threats posed by China’s EV overcapacity; and any other practices causing a “surge” in Chinese EV exports. It specifically pointed to an advance notice of proposed rulemaking issued by the U.S. in February that could lead to new import restrictions on Chinese “connected vehicles” that present national security risks (see 2402290034).

“Distinct from the risks to the development of Canada’s EV industry, connected vehicles with technology from China could pose cyber and data security risks, along with associated privacy considerations,” Canada said.

The country added that it has seen an “initial influx” of Chinese EVs in recent years, including almost $2.3 billion in imports in 2023. If “left unchecked,” the surge in Chinese EVs could “adversely affect planned EV investments and the transformation of Canada’s automotive sector,” Canada said.