After US And EU, Now Canada Considers Imposing Tariffs On Chinese EVs As Domestic Pressure Mounts: Report

Canada is considering imposing tariffs on Chinese-made electric vehicles in line with recent moves by the U.S. and the European Union. This decision, if implemented, could significantly impact the global EV market.

What Happened: The Canadian government, led by Prime Minister Justin Trudeau, is contemplating the imposition of new tariffs on Chinese EVs, reported Bloomberg on Friday, citing people familiar with the matter. This comes after similar actions were taken by the U.S. and the EU.

The potential tariffs are expected to be announced soon, with the government initiating public consultations. This move aims to address China’s overproduction of EVs, a strategy that Western democracies view as an attempt to dominate global supply chains and undermine their industries.

Trudeau has been facing mounting pressure to align Canada’s tariff policy with that of the U.S. and the EU. The Biden administration announced a plan in May to significantly increase tariffs on Chinese-manufactured EVs, with the final rate reaching 102.5%. The EU also revealed plans to raise tariffs on Chinese EVs, with some vehicles facing levies as high as 48%.

A spokesperson for Finance Minister Chrystia Freeland mentioned that Canada is actively considering next steps to counter Chinese oversupply but did not specify whether tariffs are being planned, according to the report.

"China has an intentional, state-directed policy of overcapacity," Katherine Cuplinskas, Freeland's press secretary, said, according to the report. "Protecting Canadian jobs, manufacturing, and our free trade relationships is essential."

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Why It Matters: The potential imposition of tariffs by Canada follows a series of global trade moves that have significantly impacted the EV market. The EU, for instance, introduced new tariffs on Chinese EVs in response to what it deemed as China’s unfair state support. This move was met with mixed reactions from Chinese EV makers and experts.

Chinese carmakers, in turn, reportedly urged Beijing to raise tariffs on European gasoline-powered cars in retaliation for the EU’s restrictions on the export of Chinese-made EVs. This request was made during a closed-door meeting organized by China’s Ministry of Commerce and attended by representatives from both Chinese and European car companies.

Meanwhile, the EU’s move to impose provisional tariffs on Chinese EVs was expected to pose challenges for Chinese automakers. However, according to experts, companies like Warren Buffet-backed BYD BYDDF BYDDY were predicted to remain competitive despite the new tariffs.

Meanwhile, the U.S. is reportedly pressuring allies like Japan and the Netherlands to tighten their export policies to further restrict China’s access to advanced semiconductor technology.

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Photo courtesy: Shutterstock

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote