The Trudeau government introduced a 100% tariff on Chinese-made electric vehicles (EVs) and a 25% tariff on Chinese steel and aluminum, citing protectionist measures to shield Canadian industries. Finance Minister Chrystia Freeland accused China of flooding the market with inexpensive EVs through an “intentional, state-directed policy,” vowing decisive action against what she called “unfair competition.”
Imports of Chinese EVs surged nearly 1,900% this year, reaching $2.3 billion, according to the Parliamentary Budget Officer (PBO). After a 30-day public consultation period, Canada faced criticism for delaying retaliatory tariffs, with Conservative MP Ryan Williams noting the U.S. had acted swiftly to protect its industries. On August 1, the U.S. imposed a 100% tariff on Chinese EVs, followed by additional levies on steel, aluminum, and other goods. Canada mirrored these measures on October 1.
A December 5 PBO report estimated the tariffs would generate $473 million in revenue through fiscal year 2028/2029. Despite over $150 billion in domestic EV sector investments, China dominates the global market, with Tesla’s Shanghai plant exacerbating challenges. China controls 80% of the lithium-ion battery supply, according to the report.
The PBO highlighted concerns about excess Tesla EV production outside China potentially bypassing tariffs by targeting higher-income markets. Meanwhile, analysts noted that only 327,732 of Canada’s 25.7 million registered vehicles are battery-powered, raising questions about consumer adoption. Tesla reported a 9% earnings drop due to declining demand, even as a federal mandate aims to phase out fossil-fuel vehicles by 2035.
The government also allowed businesses to seek tariff exemptions for certain goods, citing potential domestic strain. In 2023, Chinese steel accounted for 8.1% of Canada’s total steel imports, while Chinese aluminum made up 21.8%.
Freeland emphasized defending Canadian interests against what she described as China’s exploitation of the global economic system, though critics pointed to unresolved issues like pensioner investments in Chinese EVs. The debate underscores tensions over trade policies and their impact on industries and consumers.
