Canada to Match US With 100% Duty on Chinese EV Imports

Canada will soon impose a 100% import tariff on all Chinese-made electric vehicles and a 25% tariff on certain Chinese steel and aluminum products, moves that will protect its auto industry from what it said are Beijing’s “unfair, non-market policies and practices.”

The announcement -- which will lead to new EV tariffs beginning Oct. 1 and steel tariffs on Oct. 15 -- came about three months after the U.S. also announced a 100% tariff on Chinese-origin EVs (see 2405140008) and as the EU prepares countervailing duties on imports from Chinese EV makers (see 2408200020). Canada pointed to both of those measures in its Aug. 26 decision, adding that conversations with “stakeholders” have “confirmed that exceptional measures are required to address this extraordinary threat.”

Beijing’s “intentional, state-directed policy of overcapacity and lack of rigorous labour and environmental standards threaten workers and businesses in the EV industry around the world and undermine Canada’s long term economic prosperity,” Canada said.

The country’s new EV duty will apply to battery, plug-in hybrid and fuel cell passenger automobiles, trucks, buses and delivery vans listed under 23 Harmonized Systems codes. Canada also published an initial list of more than 150 HS codes that could be subject to the new steel and aluminum tariffs, but it said the list isn’t yet final. The country is accepting public comments before it finalizes those items by Oct. 1.

Chrystia Freeland, Canada’s finance minister, said the country’s steel and aluminum sectors are “facing an intentional, state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets.” She said that’s why Canada “is moving forward with decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners.”

Canada said the tariffs won’t apply to Chinese goods that are “in transit to Canada on the day” the tariffs take effect. The country will review the tariffs within one year.

The announcement came about eight weeks after Canada launched a public consultation on potential duties or other measures the country should take against imports of Chinese EVs (see 2407030035). The country plans to launch another consultation this week “concerning other sectors critical to Canada’s future prosperity,” it said, “including batteries and battery parts, semiconductors, solar products, and critical minerals."

Canada also plans to limit eligibility for several of its auto industry incentive programs. Its Incentives for Zero-Emission Vehicles, the Incentives for Medium and Heavy Duty Zero Emission Vehicles, and the Zero Emission Vehicle Infrastructure Program will be limited to “products made in countries which have negotiated free trade agreements with Canada,” the country said.

The United Steelworkers union applauded the announcement. Marty Warren, USW national director, said the Canadian government “can and should be more aggressive in stopping unfair trade, for the benefit of jobs in our local communities.”

In comments submitted to Canada earlier this month and released by USW this week, the union had suggested Canada impose a 100% tariff on Chinese EVs. The group noted that the U.S. had “already taken forceful action in this regard” and said Canada should “likewise apply its authority” to “match the U.S., our largest trading partner.”

The group also offered other supply chain and trade-related recommendations, including one to better “monitor and scrutinize” Chinese investments in the Canadian EV supply chain and EV and electrical infrastructure “to ensure that domestic producers and industries are shielded from intellectual property theft, forced technology transfers and other trade distorting practices.” It also called on Canada to impose new tariffs on imports of Chinese critical minerals, batteries and battery products, specifically mentioning lithium-ion batteries, natural graphite and permanent magnets.

“Canada needs to develop and promote more comprehensive industrial policies that rival those pursued by the Biden administration in the U.S.” the group said. “These efforts need to be supported by a first-class trade remedy system that does more to proactively ensure fair conditions for Canadian producers and workers.”