Deputy Prime Minister and Finance Minister Chrystia Freeland is expected to announce a plan to impose tariffs on Chinese electric vehicles (EVs) and battery imports, aiming to protect Canada’s EV supply chain from what is seen as unfair competition from China.
Following similar moves by the United States and Europe earlier this year, Canada is preparing to introduce tariffs, but only after the Canadian International Trade Tribunal completes an anti-subsidy investigation.
At present, the only Chinese-made EVs imported into Canada are Teslas manufactured at Tesla’s Shanghai factory. However, China plays a significant role in supplying batteries and battery components to Canada, a sector that has seen substantial investment from the Canadian government over the past four years.
In 2021, China produced almost 80% of the world’s lithium-ion batteries for EVs. According to the International Energy Agency, nearly 60% of global EV sales are now of Chinese-made vehicles.
Accusations that China has unfairly subsidized its EV industry have led both the U.S. and Europe to retaliate. In mid-May, U.S. President Joe Biden announced a tariff hike on Chinese EVs from 25% to 100%, despite only one Chinese EV being available in the U.S. Biden also increased tariffs on lithium-ion batteries and other clean energy products.
The European Commission, after its preliminary findings, announced provisional tariffs of 17% to 38% on Chinese-made EVs, effective July 4. Negotiations between Europe and China over these tariffs are ongoing.
The Canadian plan is still in development, with consultations typically preceding the imposition of tariffs. Prime Minister Justin Trudeau has indicated that Canada is closely monitoring the situation and is deciding on the best course of action.
On June 12, International Trade Minister Mary Ng confirmed that Canada was working on its own response to the issue. Ng emphasized the importance of protecting the substantial investments made in the country’s EV supply chain, which has seen over $46 billion in investments since 2020 for 13 EV, battery, and battery component manufacturing projects.
Details of Canada’s tariff plan will depend on the outcomes of the consultation process and the anti-subsidy investigation by the Canadian International Trade Tribunal.