Canada to Curb China EV Imports as Trudeau Responds to Biden Move (2024)

(Bloomberg) — Canada is clamping down on imports of Chinese-made electric vehicles, as Prime Minister Justin Trudeau’s government seeks to align itself with the Biden administration on trade.

Finance Minister Chrystia Freeland announced the start of a 30-day public consultation period — the first stage before Canada can bring in tariffs on Chinese EVs. The government’s plan to hike these tariffs was first reported by Bloomberg News last week.

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Freeland said the government will also examine changes to the list of electric vehicles that are eligible for federal consumer incentives, as well as “broader investment restrictions in Canada” for the EV industry.

“All possible tools are on the table,” she said.

Speaking at a news conference in the Toronto region, Freeland said Canada’s auto industry is “facing unfair competition from China’s intentional, state-directed policy of overcapacity that is undermining Canada’s EV sector’s ability to compete in domestic and global markets.”

Canada has been under pressure to coordinate with Group of Seven allies on China trade policy. The White House last month unveiled plans to nearly quadruple US tariffs on Chinese-manufactured electric vehicles, up to a final rate of 102.5%, while the European Union also plans to increase tariffs, taking those levies as high as 48% on some vehicles.

China has suggested there may be benefits for Germany if the EU backs off on its plan — it has floated lowering its existing tariffs on large-engine cars in return for scrapping the planned EV levies, according to people familiar with the discussions.

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Trudeau also faces tensions domestically. The Canadian auto industry has been pushing him to hike tariffs in order to protect domestic jobs and wages, arguing that China’s EVs are cheaper due to much weaker labor standards.

With a joint review of Canada’s free trade agreement with the US and Mexico coming up in 2026, Trudeau’s government has been urged by business groups to ensure Canada isn’t seen as a side door for cheap Chinese goods into the rest of North America. One of the government’s goals, Freeland said Monday, is “to prevent trans-shipment through Canada” of vehicles from China.

Still, Trudeau has moved cautiously toward hiking tariffs on China. China is Canada’s second-largest trading partner, behind only the US.

Chinese Foreign Ministry spokeswoman Mao Ning said Tuesday at a regular press briefing in Beijing that her nation believed “politicizing trade and setting barriers will only undermine the normal trade and economic cooperation between two countries.”

Some environmentalists also oppose the move, worrying that higher tariffs on EVs will only raise prices and hamper consumer adoption of cleaner technology.

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The Conservative Party, currently favored to win the next election, released a broadly supportive statement on the plan to hike tariffs. “Canada should not allow the dumping of cheap Chinese products into our country that threaten Canadian manufacturing jobs,” said Kyle Seeback, the party’s trade critic.

Although the value of Chinese EVs imported by Canada has surged recently, there has so far been little activity involving Chinese domestic vehicle makers.

The vast majority of Canada’s EV imports from China are Tesla Inc. vehicles produced from its Shanghai factory. Freeland would not comment on whether tariffs might apply to those vehicles.

—With assistance from Sarah McGregor, Kamil Kowalcze, Alberto Nardelli and Philip Glamann.

(Updates with response from China’s Foreign Ministry.)

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