In a significant move aligning with the United States, Canada announced a 100% tariff on Chinese-made electric vehicles (EVs), including those produced by Tesla. The decision marks a firm stance by the Canadian government to protect domestic manufacturers from what it perceives as unfair competition. Tesla’s shares fell by 3% following the news, reflecting concerns about the impact of these tariffs on the EV market.
The Canadian government also introduced a 25% levy on Chinese-made steel and aluminum, further aligning with its Western allies to protect critical industries. This policy shift follows a three-day closed-door meeting in Halifax, Nova Scotia, which included key figures such as US National Security Advisor Jake Sullivan and Canadian Prime Minister Justin Trudeau.
Protecting Domestic Interests
Prime Minister Trudeau emphasized the importance of this move, stating, "Actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian auto and metal workers." The tariffs are part of a broader strategy to ensure that Canadian industries remain competitive in the face of what Trudeau described as non-market practices by countries like China.
In addition to the EV tariffs, the Canadian government will implement additional levies on hybrid passenger vehicles, trucks, buses, and delivery vans. These measures come alongside an existing 6.1% levy on imports from China. The new tariffs on steel and aluminum will be enforced starting October 15th. Furthermore, Deputy Prime Minister Chrystia Freeland announced a 30-day consultation period to explore potential tariffs on other sectors, including batteries, solar products, chips, and critical minerals.
Related: EU Cuts Planned Tariff on China-Made Tesla Vehicles to 9%, Sparking Potential Surge in Sales
Impact on Tesla and the EV Market
The 100% levy on Chinese-made Teslas has already had a noticeable impact, with the company’s shares dropping by 3% on Monday. Tesla, the world’s largest EV manufacturer, has been importing its Model 3 and Model Y vehicles from China to Canada. While specific numbers have not been disclosed, data from Statistics Canada reveals that the value of Chinese EV imports to Canada surged to C$2.2 billion (€1.97 billion) last year, up from just C$100 million (€90 million) in 2022.
This surge in imports is largely attributed to Tesla’s decision to sell Shanghai-made EVs in Canada, leading to a 460% increase in imports from China in 2023, as reported by Vancouver, Canada’s largest port. While Chinese EV manufacturers have yet to gain a significant foothold in the Canadian market, the government’s primary concern is the potential entry of companies like BYD, which plans to begin operations in Canada as early as 2025.
International Reactions and Future Implications
The announcement has drawn sharp criticism from China, with the Chinese embassy in Canada labeling the move as "a typical act of protectionism and politics." The embassy’s statement accused Canada of violating World Trade Organization (WTO) rules and warned that China would take "all necessary measures" to protect the interests of its enterprises.
China’s rapid advancements in the EV sector, the embassy argued, are due to innovation and a comprehensive supply chain, not government subsidies. This dispute is likely to be a key topic during an upcoming meeting between Chinese officials and US representatives, including Chinese Foreign Minister Wang, according to reports from Xinhua News Agency.
As the global EV market continues to evolve, Canada’s decision to impose these tariffs may set a precedent for other nations grappling with the challenges of balancing domestic industry protection with international trade relations.
Source: Euronews
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