100% Canadian Tariffs Placed on China EVs

Canadian Tariffs: Steps to Protect Jobs from Chinese Trade Practices

Canada has announced new rules to protect its workers and businesses from unfair competition with China. These actions are meant to help Canadian industries, especially those making electric vehicles (EVs), steel, and aluminum, stay competitive.

What Canada Is Doing

On August 26, 2024, Deputy Prime Minister and Minister of Finance Chrystia Freeland announced these new measures. The goal is to protect Canadian jobs and industries from what is seen as unfair trade practices by China.

Here’s a breakdown of what Canada plans to do:

1. Electric Vehicles (EVs): Starting October 1, 2024, Canada will add a 100% tax on all electric and hybrid vehicles made in China. This is on top of the current 6.1% import tax. This move is to protect Canada’s auto industry, which supports over 125,000 jobs.

2. Steel and Aluminum: Canada will also add a 25% tax on steel and aluminum products from China beginning October 15, 2024. This measure aims to protect the more than 130,000 jobs in these sectors from unfair competition due to China’s large production capabilities.

3. Other Important Industries: The government will hold a 30-day review to decide if more actions are needed for other key sectors like batteries, semiconductors, solar products, and critical minerals. This could lead to more rules to protect these industries.

4. Zero-Emission Vehicle Incentives: Canada will limit its incentives for zero-emission vehicles to those made in countries that have free trade agreements with Canada. This ensures that Canadian incentives benefit local industries and workers.

Canada Joins Global Effort

Canada’s actions are similar to steps taken by other big economies like the United States and the European Union. Earlier this year, the United States increased taxes on Chinese-made electric vehicles and hybrids to 100%. The European Union also put extra taxes on Chinese-made EVs.

These actions show that there is a common concern about China’s trade practices. Many countries feel that China’s subsidies and loose regulations create an unfair market.

The Effect of Chinese Trade Practices

China has become the world’s largest producer and exporter of electric vehicles since 2020. This is due to big state subsidies and other supportive policies. In 2023, China exported $47.2 billion worth of EVs, a huge jump from $0.2 billion in 2018.

China’s reach isn’t just in EVs. The country has also boosted its steel and aluminum production. Since 2018, China has added more steelmaking capacity than Canada’s entire production capacity. It now makes over half of the world’s aluminum, up from just 11% two decades ago.

Security and Fairness Concerns

There are also security worries about Chinese-made products. For example, vehicles with Chinese technology could pose risks to privacy and data security for Canadian drivers. This adds another reason for concern about Chinese influence in important sectors.

China is also a key player in producing batteries, semiconductors, solar products, and critical minerals. These areas are vital for moving towards a net-zero economy. According to the International Energy Agency, China processes more than half of the world’s lithium, cobalt, graphite, and rare earth elements, all of which are essential for green technologies.

What’s Next for Canada and Canadian Tariffs

Canada will keep working with other countries to address these challenges. The measures announced will be reviewed after one year. The government has said they could be extended or changed if needed.

Through these steps, Canada aims to protect its workers, ensure fair competition, and support the long-term success of its key industries. As global trade rules change, Canada and its partners are committed to making sure they are fair and effective in preventing market distortions and promoting sustainable growth.