The Canadian government has introduced new measures to address competition from Chinese producers in the electric vehicle (EV), steel, and aluminum sectors.
The measures include a 100% surtax on Chinese-made EVs, effective October 1, 2024, and a 25% surtax on imports of Chinese steel and aluminum, starting October 15, 2024. These steps aim to protect Canadian jobs and industries from China’s state-driven overcapacity and lax standards, which have been seen as undermining global competition.
Additionally, the government plans to limit incentives for zero-emission vehicles to products from countries with free trade agreements with Canada.
“Canada is home to the talented workers, raw materials, clean electricity, and specialized production capabilities needed to build electric vehicles, and that is why our EV supply chain potential is ranked first in the world. Canadian workers and critical sectors, including steel and aluminum, however, are facing an intentional, state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets. That is why our government is moving forward with decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance.
A 30-day consultation will also be launched to consider further measures for critical sectors like batteries, semiconductors, and solar products.
These actions follow similar steps taken by key trading partners, including the United States and the European Union, to counter unfair trade practices from China. The measures will be reviewed after one year and may be extended or expanded as needed. Canada rarely sets new policy first, but usually will follow its allies including the USA.
Of course, this plan affects Tesla vehicles made at its Giga Shanghai factory, which exports Model 3 and Model Y vehicles to Canada. Tesla would have to be forced to import cars made from its Fremont, California factory to Canada instead.
A Canadian government official confirmed to Reuters Tesla is affected. It’s the only car company that exports cars to Canada from China.