TORONTO, ONT – Canada announced Monday it is launching a 100% tariff on imports of Chinese-made electric vehicles, matching U.S. tariffs imposed over what Western governments say are China's subsidies that give its industry an unfair advantage.
The announcement came after encouragement by U.S. national security advisor Jake Sullivan during a meeting with Canadian Prime Minister Justin Trudeau and Cabinet ministers Sunday. Sullivan is making his first visit to Beijing on Tuesday.
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Trudeau said Canada also will impose a 25% tariff on Chinese steel and aluminum. “Actors like China have chosen to give themselves an unfair advantage in the global marketplace,” he said.
One of the Chinese-made EVs imported into Canada is from Tesla, made at the company’s Shanghai factory, though the U.S. company could avoid the tariff by switching to supplying Canada from factories in the U.S. or Germany.
Chinese brands are not yet a player in Canada. However, Chinese EV giant BYD established a Canadian corporate entity last spring and has indicated it intends to try and enter the Canadian market as early as next year.
Chinese officials are likely to raise concerns about the American tariffs with Sullivan as Beijing continues to repair its economy after the COVID-19 pandemic. U.S. President Joe Biden in May slapped major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.
“The U.S. does believe that a united front, a coordinated approach on these issues benefits all of us,” Sullivan told reporters on Sunday.
Biden has said Chinese government subsidies for EVs and other consumer goods ensure that Chinese companies don’t have to turn a profit, giving them an unfair advantage in global trade.
Chinese firms can sell EVs for as little as $12,000. China’s solar cell plants and steel and aluminum mills have enough capacity to meet much of the world’s demand. Chinese officials argue their production keeps prices low and would aid a transition to the green economy.
“We’re doing it in alignment, in parallel, with other economies around the world that recognize that this is a challenge that we are all facing,” Trudeau said of the new tariffs. “Unless we all want to get to a race to the bottom, we have to stand up.”
Deputy Prime Minister Chrystia Freeland said Canada also will launch a 30-day consultation about possible tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals and solar panels.
“China has an intentional state-directed policy of overcapacity and oversupply designed to cripple our own industry,” Freeland said. “We simply will not allow that to happen to our EV sector, which has shown such promise.”
The Chinese Embassy said Ottawa disregarded Beijing's repeated objections and said the move will damage trade and economic cooperation.
"This move is typical trade protectionism and politically-motivated decision, which violates the World Trade Organization(WTO) rules and goes against Canada’s traditional image as a global champion for free trade and climate change mitigation,” the embassy said in an emailed statement. “China will take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.”
Canada "had to go with the U.S. position, when you think about the economic integration that we have with the U.S. More than 75% of our exports go to the U.S.,” said a former Canadian ambassador to China, Guy Saint-Jacques.
Saint-Jacques said Canada can expect retaliation from China in other industries, adding that barley and pork are candidates because the Chinese can get it from other countries.
“China will want to send a message,” he said.
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This story has been corrected to say Tesla is one of the Chinese-made EVs imported into Canada, not the only one.