In a move that signals a significant increase in global trade tensions, Canadian Prime Minister Justin Trudeau announced Monday that Canada will slap a 100% tariff on electric vehicles imported from China. The policy mirrors similar moves by the United States and the European Union to boost domestic auto manufacturing.
The move is seen as a strategic alignment with U.S. policies, where President Biden has previously declared similar tariffs on Chinese electric vehicles. These measures serve as a safeguard for the significant investments made by Canadian and provincial governments in establishing electric vehicle and battery manufacturing facilities across Canada by major automakers and technology companies such as Honda, Stellantis, Volkswagen, General Motors and LG.
Additionally, Canada is poised to introduce a new 25% tariff on steel and aluminum imports from China, a move that will likely exacerbate already tense relations between Canada and China, potentially prompting China to take countermeasures against Canadian exports, particularly in the agricultural sector.
Addressing the media in Halifax, Nova Scotia, Trudeau stressed the need for these tariffs, saying: “The disparities in trade practices have led us to adopt these measures in coordination with global economies, ensuring that we maintain competitive but fair trade standards.”
The tariffs on Chinese EVs are expected to take effect on October 1, following public consultations that began in early July. Meanwhile, the United States plans to implement tariffs by the end of August, and the European Union will adjust tariffs on Chinese EVs by the end of October.
Despite subsidies provided by the Canadian government, which previously included a significant portion for Chinese electric vehicles, there has been a shift toward supporting domestically produced electric vehicles. This move has been strongly supported by Canadian automakers and Unifor, the autoworkers union.
Environmental advocates, however, have criticized the high tariffs, saying they will hinder the adoption of eco-friendly vehicles by keeping market prices high. Joanna Kyriazis of Clean Energy Canada expressed disappointment, suggesting that “alternative strategies should be considered to promote competitive domestic production without compromising environmental goals.”
The policy shift comes against a backdrop of tense relations with China, which worsened after Canada's arrest of Huawei executive Meng Wanzhou at the request of the United States, which led to retaliatory actions by China, including arbitrary detentions and trade blockades.
This evolving situation highlights a complex interplay between trade, diplomacy and industry, with significant implications for the future of international relations and environmental policy.
