100 Percent Tariff on China-Made EVs Will Level Playing Field for Canada’s EV Sector, Industry Rep. Says

A BYD 07 EV model electric car is displayed at the Beijing Auto Show on April 25, 2024. Pedro Pardo/AFP via Getty Images

Ottawa is cracking down on Chinese-made electric vehicle imports to Canada with the imposition of a 100 percent tariff as of Oct. 1, a move that will help level the EV pricing field for all producers, an industry representative says. 

Prime Minister Justin Trudeau announced the new tariff on Aug. 26, saying it will address China’s “unfair advantage” in the EV sector. The tariff will apply to electric buses, cars, delivery vans, and certain hybrid vehicles. A 25 percent tariff will also be put on China-made imports of steel and aluminum products starting Oct. 15.

Global Automakers of Canada president and CEO David Adams described the new EV tariff as a “pre-emptive measure” to ensure equal opportunity across Canada’s EV marketplace.

“At this point the number of Chinese EVs entering the country is relatively small but has grown significantly,” he told The Epoch Times. “This measure will give Canada more time to continue to build out its own EV ecosystem which the private sector and the government have invested in significantly as the industry transitions away from ICE (internal combustion engine) vehicles towards electrified propulsion.”

EV Pricing

The lion’s share of Chinese-made EVs currently being imported into Canada probably wouldn’t be recognized by most Canadians as being from China, Adams said.

“Principally, they are Teslas built in China,” he said.

Tesla’s vehicles are manufactured in the company’s Shanghai factory before being shipped to North America. They then enter Canada through the U.S.

At this point, the foreign EV impact is relatively minor, Adams said. But that may not be the case for much longer.

Chinese electric vehicle maker BYD is looking to expand into the Canadian automotive market, according to a recent regulatory filing.

Consultants representing BYD filed documentation with Ottawa in late July to advise Ottawa of “matters related to the expected market entry of BYD into Canada for the sale of passenger electric vehicles, and the establishment of a new business.”

The Epoch Times contacted BYD for comment on its plans and potential vehicle prices, but didn’t receive a response prior to publication. Based on BYD’s average pricing in other markets, it’s expected that that other electric vehicles sold in Canada would not be able to compete with the company’s offerings on price.

The average price for a new vehicle in Canada was approximately $67,000 in June, according to AutoTrader stats. The average price of an EV topped $73,000 last year, according to the Canadian Black Book.

A Tesla Model 3, the cheapest of the company’s vehicles, comes in at $52,000 in Canada, significantly more than models BYD is making and selling at home. BYD last year introduced a small EV called the Seagull that sells for just US$12,000 in China.

The worry, Adams said, is that as more electric vehicles from BYD and other Chinese companies make their way to Canada, automotive manufacturers from other countries won’t be able to compete. The highly subsidized EVs from China would be “cheaper than anything in the market and could serve to undermine the very market we are investing in and trying to grow,” he said.

Tariff Impact

China has become a major supplier of EV vehicles and batteries in recent years, due in part to increases in government subsidies. China accounted for nearly 80 percent of all lithium-ion batteries for electric vehicles globally by 2021. By 2023, nearly one in five EVs sold in Europe were manufactured in China.

That has led both the United States and the European Union to also implement tariffs against Chinese EVs.

U.S. President Joe Biden said in May he would hike tariffs on Chinese EVs from 25 percent to 100 percent effective Aug. 1, while the EU has set tariffs that could run upward of 37 percent.

Biden has said Beijing’s subsidies for electric vehicles and various consumer products allow Chinese companies to forgo profit-making, throwing global trade off balance.

The EU set tariffs of up to 37.6 percent on China-manufactured EVs by all member states beginning July 5. The decision will initially apply for four months but can be extended for several years.

Adams said the tariff has already slowed the flow of Chinese EVs into Europe. He said Europe and the U.S. are largely in the same situation as Canada, in that there are very few Chinese EVs in the market as yet.

“It is a defensive move to ensure that the domestic ecosystem has an opportunity to get built up,” he said.

Canada following the lead of the EU and U.S. by slapping a 100 percent tariff on China comes as no surprise to Guy Saint-Jacques, former Canadian ambassador to China.

Canada “had to go with the U.S. position, when you think about the economic integration that we have with the U.S.,” he said. “More than 75 percent of our exports go to the U.S.”

U.S. National Security Adviser Jake Sullivan confirmed during an Aug. 25 press conference at the Liberal cabinet retreat in Halifax that the U.S. has encouraged Canada to follow its example.

Sullivan said while it is up to Canada to determine its own trade policies, U.S. officials would be speaking with its Canadian counterparts “behind closed doors about our experience and what we see.”

“The U.S. does believe that a united front, a coordinated approach on these issues benefits all of us,” Sullivan said.

Deputy Prime Minister Chrystia Freeland said Canada’s decision was cemented after hearing from the country’s automotive sector.

“Our government’s starting point is to act resolutely to defend the national interest, to defend Canadian workers and to defend the Canadian economy,” Freeland said in an Aug. 26 press conference.

“The reality is China has an intentional state-directed policy of overcapacity and oversupply designed to cripple our own industries. Talk to the steel sector, talk to the aluminum sector, to understand how effective that has already been, and we simply will not allow that to happen to our EV sector, which is showing such promise.”

EV Sector

The new measures come at a time that the Canadian EV industry has been showing signs of slowed growth. General Motors discontinued its entry-level Chevy Bolt EV last year. While the exact timing and pricing for the return of the Bolt remain undecided, the company is planning to reintroduce it by the end of next year, GM Canada president Kristian Aquilina said.

Umicore announced last month it had halted spending on a $2.76-billion battery materials plant in eastern Ontario, citing substantially scaled-back growth projections for the EV market.

And in April, Ford announced a two-year delay in the planned production of electric vehicles at its facility in Oakville, Ont., followed by a June announcement that it was shifting its production strategy from EVs to focus on its Super Duty pickup trucks.

Zero-emission vehicles, including both pure battery and plug-in hybrids, represented 11.3 percent of total auto registrations during the first quarter, marking a 12 percent reduction from the previous quarter, according to Statistics Canada.

S&P Global Mobility stats showed that, despite a slight overall decrease, battery electric vehicle registrations rose 57 percent in the first four months of 2024 compared with last year, while plug-in hybrid registrations increased more than 75 percent.

The Canadian Press and The Associated Press contributed to this report.