Canada has announced a 100% tariff on Chinese-made electric vehicles (EVs), including those produced by Tesla, as part of a broader strategy to align with Western allies and protect domestic manufacturers. Tesla’s shares fell by 3% on Monday following the announcement.
The Canadian government revealed a 100% levy on Chinese-made EVs and a 25% levy on steel and aluminum imports, mirroring the United States’ recent decision to impose similar tariffs on Chinese EVs. The U.S., Canada’s closest trading partner, introduced a 100% tariff on Chinese-made electric vehicles in May.
In contrast, the European Union has opted for much lower levies on imports from China, particularly on Tesla vehicles, with the latest European Commission update reducing the additional tariff on China-made Tesla EVs to 9% from the initially planned 20.8%.
The Canadian decision followed a three-day closed-door meeting in Halifax, Nova Scotia, attended by U.S. National Security Advisor Jake Sullivan, Canadian Prime Minister Justin Trudeau, and key cabinet ministers.
Prime Minister Trudeau emphasized the need to address what he described as unfair advantages in the global marketplace, specifically pointing to China. He noted that Ottawa would continue working closely with the U.S. and other allies to ensure consumers are not unfairly affected by the non-market practices of countries like China.
Canada’s Tariffs and Their Impact The new tariffs, which include levies on certain hybrid passenger vehicles, trucks, buses, and delivery vans, are set to take effect on October 1, adding to the existing 6.1% levy on imports from China. Additional tariffs on steel and aluminum imports will begin on October 15.
Deputy Prime Minister Chrystia Freeland also announced a 30-day consultation period to explore potential tariffs on other sectors, including batteries, solar products, chips, and critical minerals.
Tesla Among Those Affected Tesla, the world’s largest EV manufacturer, will be notably impacted by the 100% levy on Chinese-made vehicles. Vehicle identification codes have indicated that Tesla’s Model 3 compact sedan and Model Y crossover, shipped from China to Canada, will be subject to these tariffs, although the company has not disclosed specific numbers.
According to Statistics Canada, the value of Chinese EVs imported from China to Canada surged to C$2.2 billion (€1.97 billion) in 2023, up from C$100 million (€90 million) in 2022. Imports from China increased by 460% in 2023, driven primarily by Tesla’s Shanghai-made EVs entering the Canadian market.
However, the Canadian government’s broader concern is the potential entry of other Chinese EV manufacturers, such as BYD, which plans to enter the Canadian market by 2025.
China’s Response The Chinese embassy in Canada condemned the tariff as a “typical act of protectionism,” accusing Canada of disregarding World Trade Organisation (WTO) rules. The embassy’s statement argued that the rapid growth of China’s EV industry is due to innovation and a comprehensive production and supply chain, not unfair subsidies.
The embassy also warned that China would take “all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises” and address the issue with U.S. officials during upcoming meetings with Chinese Foreign Minister Wang Yi.
