Canada may increase taxes on electric vehicles imported from China

The Premier of Ontario said that Canada is at risk of losing many jobs if taxes are not increased on Chinese electric vehicles (Illustrative photo: Carscoops).

In May, the administration of US President Joe Biden announced a fourfold increase in tariffs on electric vehicles imported from China, to 100%. In early June, the European Union announced that it would add a variable tariff rate of up to 38.1% alongside the current 10% tariff on electric vehicles manufactured in China.

And last week, Ontario Premier Doug Ford suggested to Canadian Prime Minister Justin Trudeau to at least apply the same tax rate as the United States, stating that action is needed soon to prevent job losses in Ontario and Canada as a whole.

Prime Minister Trudeau stated that he is monitoring the actions of other countries and has had discussions about electric vehicles manufactured in China at the recent G7 summit in Italy.

However, no official decision has been made, and Canada needs to carefully consider, as failure to do so may result in retaliatory measures from China.

Increasingly, Chinese-made electric vehicles are being sold in Canada. In 2023, Chinese electric vehicles exported to Canada reached a value of 2.2 billion CAD (1.6 billion USD), a significant increase from the less than 100 million CAD (73 million USD) in 2022. The largest contributor to this growth is Tesla, due to its assembly plant in Shanghai.

However, a source from Bloomberg stated that Tesla is not the main concern for Canada.

According to a spokesperson for the Canadian Minister of Finance Chrystia Freeland, the country is actively considering next steps to address the surplus supply situation from China to protect employment, manufacturing operations, and free trade relationships.

Auto businesses in Canada are also urging the government to use tax tools. They argue that Canada cannot fail to support the US on this issue, especially as the United States-Mexico-Canada free trade agreement is being reconsidered.

In discussing this issue, Trudeau said, "We will carefully consider what needs to be done to protect the Canadian auto industry and Canadian consumers in the years to come."

In the first four months of this year, the highest imports of electric vehicles into Canada were from the US, with a value of 1.3 billion CAD, followed by South Korea (598.8 million CAD) and China (461.9 million CAD). Import from China increased nearly 14 times compared to the same period last year.