VAUGHAN – As announced several times in recent weeks, Canada in going to take action against the potential invasion of electric Chinese cars. Indeed, the federal government is launching a consultation process on how to address the “oversupply” of Chinese-made electric vehicles – including potential tariffs – in the global market: Finance Minister Chrystia Freeland (in the pic above, from Twitter X) announced it today, speaking in Vaughan, Ontario: the consultation process, lasting thirty days, will begin on 2 July.
A surtax on Chinese-made electric vehicles is going to be studied, after the tariffs imposed by the United States on the same vehicles and after the appeals launched by Canadian experts in the sector, first of all Flavio Volpe, president of the APMA (Automotive Parts Manufacturers ‘ Association).
“The potential policy actions we are consulting on include a surtax on imports of Chinese EVs under section 53 of the Customs Tariff Act, changes to which cars are eligible for the existing federal incentives for Zero Emissions Vehicle Program, and potentially broader investment restrictions in Canada” Freeland said, arguing that the measures are necessary because of what she called “unfair trade practices. Chinese producers are quite intentionally generating a global oversupply that undermines EV producers around the world, including here in Canada”.
In 2021, nearly 80% of all lithium-ion batteries for electric vehicles globally came out of China, and the International Energy Agency says nearly 60% of global EV sales are now Chinese made.
Freeland’s announcement follows US President Joe Biden’s announcement in mid-May that tariffs on Chinese electric vehicles would be increased from 25% to 100%, although there is only one Chinese electric vehicle currently available in the United States.
According to Freeland, Canada must act in tandem with its allies and major trading partners, particularly the United States. “Our supply chains are deeply integrated with the United States, thanks to our strong and hard-won free trade agreements. Acting in partnership to support the deeply integrated North American automotive sector is essential” she said.
Canada currently imposes a 6% tariff on Chinese-made vehicles, but cars are eligible for federal rebates of up to $5,000 for EV purchases. Currently, the only Chinese-made electric vehicles imported into Canada are Teslas produced at the US tech giant’s Shanghai plant.
China is a bigger player in Canada when it comes to batteries and battery components for electric vehicles, industries Canada has invested heavily in over the past four years. Some experts believe that Canada cannot afford a full-blown trade war with China and must walk a tightrope, but – according to Global News – Trade Minister Mary Ng said Canada will still defend its interests, despite compliance with its international commercial obligations.