Canada weighs import tariffs on Chinese electric vehicles, initiates public consultation

Canada is considering imposing import tariffs on Chinese-made electric vehicles (EVs) and will seek public opinion on the matter, its Deputy Prime Minister and finance minister Chrystia Freeland said on Monday, Al Jazeera reported.

Freeland highlighted the challenges the domestic car sector faced due to China's "state-directed policy of overcapacity," which she described as creating unfair competition. She stated that Ottawa would initiate a 30-day public consultation period starting July 2 to explore how Canada should respond.

"Chinese producers are quite intentionally generating a global oversupply that undermines EV producers around the world, including here in Canada," Freeland told reporters in Vaughan, Ontario. Her comments reflect similar concerns raised by the US and the European Union.

The public consultation aims to help the government formulate its policy response, potentially including import tariffs. Freeland emphasised that such a move would align Canada with its allies in Washington and Brussels.

In May, US President Joe Biden announced significant tariff increases on various Chinese imports, including electric vehicles. The European Commission is also planning to impose additional duties of up to 38.1 per cent on Chinese manufacturers including BYD, Geely, and SAIC, as well as on Chinese-built Tesla and BMW cars, the Al Jazeera report noted.

China has denied accusations of unfair subsidies and overcapacity issues, attributing the growth of its EV industry to technological, market, and supply chain advantages.

An opinion piece in the Chinese state-backed Global Times urged Canada to "remain strategically rational" and avoid "sacrificing normal economic exchanges with China for the sake of Washington's strategic selfishness." The piece warned that Canadian tariffs on Chinese EVs "may undermine market confidence among Chinese investors, worsen bilateral relations, and hinder normal economic and trade cooperation."

Prime Minister Justin Trudeau's Liberal government has been working to position Canada as a key player in the global EV supply chain. Recently, there has been domestic pressure to take action against Chinese EVs. The Premier of Ontario, Canada’s most populous province and a major car manufacturing hub, called for Ottawa to impose tariffs of at least 100 per cent tariffs  on Chinese-made electric vehicles to protect local jobs.

While Freeland did not provide specific details on potential actions or whether EV components like batteries could be targeted, she stated that "everything was on the table."

"We're not ruling anything out. We are bringing to bear our strongest trade action tools," she said.

Canada has secured deals worth billions of dollars to attract companies across the EV supply chain, aiming to strengthen its Ontario manufacturing base, Al Jazeera reported.