Canada slaps massive tax on Chinese EVs

Chinese-built electric vehicles are set to significantly increase in price in Canada from October 1, 2024, when a 100 per cent tariff on EVs built in China is imposed.

This will essentially double the price of a Tesla Model 3 vehicle, which are imported to Canada from China.

Other measures include the introduction of a 25 per cent tariff on Chinese steel and the move by Canada follows EU import tariffs – of up to 38 per cent – applied to Chinese-built EVs in Europe earlier this year.

A recent move from the United States also added a hefty 100% import tariff which are similar in effect but much harsher versions of previous tariffs put in place by the Australian federal government. These were designed to protect the local automotive industry, when Ford, Holden, and Toyota were still manufacturing cars here.

Since then, the local tariffs were rolled back in Australia and it is unlikely any sort of tax will be slapped on Chinese-made EVs in Australia, as there is seemingly no requirement for protectionist policies for the Aussie automotive industry.

Around a dozen new Chinese car brands are coming to Australia soon, many of them with EV-heavy portfolios.

In Canada, the new tariff applies to all EVs shipped from China, including those from global EV leader Tesla, whose share price dropped 3.2 per cent after the news.

According to Reuters, Canadian imports of automobiles from China to its largest port, Vancouver, jumped 460 per cent year over year in 2023, when Tesla starting importing vehicles from China.

Canadian Prime Minister Justin Trudeau said the new tariff was acting to counter ‘China’s intentional, state-directed policy of over-capacity’ and protect the country’s interests.

“I think we all know that China is not playing by the same rules,” Trudeau told reporters.

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

Canada’s Chinese embassy has labelled the new tariff a 'politically dominant act', stating that Canada has ignored World Trade Organisation (WTO) rules.

In a statement, a spokesperson for the embassy said the action will undermine normal economic and trade cooperation between the two countries and hurt Canadian consumers and enterprise. China is Canada’s second-largest trading partner behind the US.

“The Canadian government insisted on announcing tariffs on Chinese electric vehicles in disregard of China's repeated objections and solemn representations," the spokesperson said.

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