Summary
- Canada imposed 100% duty on Chinese-made electric vehicles
- Before the announcement, Tesla asked for a lower tariff on its autos in Canada
- The duties apply to all electric vehicles shipped from China, including those made by Tesla
- Canadian imports of automobiles from China to Vancouver increased by 460% in 2023
- Volvo Cars and Polestar are looking into the effects of the increased tariffs in Canada
Article
Canada recently announced that it would be imposing a 100% duty on Chinese-made electric vehicles, following in the footsteps of the United States. This decision was made due to what Canada referred to as China’s intentional, state-directed policy of overcapacity in the automotive industry. The tariffs would be effective starting on October 1st and would apply to all EVs shipped from China, including those manufactured by Tesla. In response to this announcement, it was revealed that Tesla had approached the Canadian government prior to the official decision, requesting a lower tariff rate similar to what it had received in the European Union.
In June, Ottawa had indicated its intention to impose tariffs on Chinese-made electric vehicles, and Tesla had sought a preferential rate for its vehicles similar to what it had received in the EU, where it faced a 9% tariff on cars made in China. However, both the United States and Canada took a broader approach when assessing tariffs, considering factors such as subsidies, industrial overcapacity, non-market policies, environmental standards, and labor practices. So far, Tesla has not reached out to Ottawa following the announcement of the tariffs, and the office of Canada’s Finance Minister has declined to comment on any discussions with the automaker.
Imports of automobiles from China to Canada’s largest port, Vancouver, saw a significant increase of 460% in 2023, largely attributed to Tesla beginning to ship Shanghai-made EVs to Canada. Meanwhile, U.S. President Joe Biden announced in May that tariffs on Chinese electric vehicles would be quadrupled to 100%, with additional duties imposed on semiconductors, solar cells, lithium-ion batteries, and other strategic goods. However, implementation of these tariffs has been delayed until September, with the possibility of softened duties being announced this week.
Volvo Cars, a Swedish carmaker, is also assessing the impact of increased tariffs in Canada. The company imports models such as the EX30, XC60, and a limited number of S90s from China to Canada. Additionally, Polestar, an electric vehicle maker partly owned by Volvo Cars and China’s Geely, ships its Polestar 2 model from China to Canada. Both companies are currently reviewing the impact of the Canadian tariffs on their operations.
Overall, the decision by Canada to impose substantial duties on Chinese-made electric vehicles has significant implications for automakers and the electric vehicle industry as a whole. The move follows similar actions by the United States and reflects a broader concern about China’s policies in the automotive sector. While Tesla sought preferential treatment from Canada, the country took a more comprehensive approach in determining tariff rates. As the situation continues to develop, companies like Tesla, Volvo Cars, and Polestar will need to navigate the changing trade landscape to ensure their continued success in the Canadian market.
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