Canada joins anti-China EV trade war

CANADA is set to follow the United States in introducing a 100 per cent import tariff on imported Chinese-made electric vehicles that coincides with an impost of close to 50 per cent in Europe.

According to a Canadian government official, the duty will apply to all EVs shipped from its second-largest trading partner, including those made by Tesla. It will come into effect from October 1.

A Reuters report published this week states that Canadian imports of vehicles from China grew over 460 per cent in the year ending December 2023 to 44,356 units.

Canadian prime minister Justin Trudeau told the publication Ottawa was acting to counter what he referred to as state-directed over capacity of Chinese vehicles.

“I think we all know that China is not playing by the same rules,” he said.

“What is important about this is we’re going in alignment and in parallel with other economies around the world.”

The Chinese embassy in Canada said the move was “protectionist” and a “politically dominant act”, adding that Canada has ignored World Trade Organisation (WTO) rules.

“The Canadian government insisted on announcing tariffs on Chinese electric vehicles in disregard of China’s repeated objections and solemn representations,” said a representative from the Chinese embassy.

“China urges Canada to respect objective facts, abide by WTO rules, immediately correct its erroneous practices and refrain from politicising economic and trade issues.

“It is a 100 per cent surtax on all Chinese-made EVs. If companies currently making vehicles in China choose to move their production to a different country, they would no longer be captured by this tariff," the government official said.

Responding to the statement, Mr Trudeau said Ottawa will continue to work with ally countries to ensure consumers around the world are not unfairly penalised by non-market practices of countries such as China.

He said Canada will look to impose further punitive measures, such as tariffs on microprocessors and solar cells, as well as the importation of Chinese steel and aluminium. Mr Trudeau announced a 25 per cent import tariff on the metals as of October 1.

In May, US president Joe Biden announced the nation would increase tariffs on vehicles produced in the People’s Republic, including electric vehicles, to 100 per cent on top of its existing 7.5 per cent import tax.

Europe’s variable import tax – which increases with the proportion of state-ownership among Chinese manufacturers – will become permanent in November. The European Commission will impose import tariffs of up to 38.1 per cent on imported Chinese cars on top of its standard 10 per cent import duty already in effect.

Meanwhile, and as reported by GoAuto last week, Australian sales of Chinese vehicles have increased unabated by such measures as announced by Canada, the European Union, and the United States.

In a market where protectionist measures are seen as unnecessary, the share of Chinese-made vehicles has grown from just 4.2 per cent a decade ago to now rank third behind Japanese and Thai-built vehicles.