Canada is closely monitoring the new U.S. import tariffs on Chinese-made electric vehicles imposed by President Joe Biden, which have increased to 100 percent. Although Chinese brands are not currently major players in Canada’s electric vehicle market, imports from China have grown significantly in the past year due to Tesla shifting its sales to its manufacturing plant in Shanghai. The Canadian Vehicle Manufacturers’ Association believes that Chinese EV makers have made substantial strides in Europe and are now turning their focus to North America. There is speculation that Canada may need to align its policies with the U.S. to avoid being out of step with its neighbor, even though the government has not committed to implementing similar tariffs.
While the Canadian government has not yet decided to follow the U.S. in imposing import tariffs on Chinese electric vehicles, Prime Minister Trudeau and other officials are closely monitoring the situation. Canada and the U.S. have been working to align their electric vehicle industries in recent years, with significant investments in EV battery and vehicle manufacturing sites. The Canadian government is making efforts to boost the EV industry in the country and to prevent China from gaining a foothold in North America’s auto sector, which plays a significant role in both countries’ economies. With EVs forming an increasingly important part of the automotive sector, Canada has set mandates for EV sales targets, unlike the U.S.
Chinese car brands have seen substantial market share growth in Europe, with the affordability of their electric vehicles compared to other brands contributing to this increase. Chinese EVs are priced lower than similar models from competitors, leading to their popularity in European markets. In response, the European Commission has initiated an investigation into Chinese EV subsidies, suggesting potential import tariffs in the future. The Canadian Vehicle Manufacturers’ Association recommends that Canada should also consider investigating China’s EV subsidy practices before Chinese EVs hit the Canadian market. While Canada currently has a relatively small portion of Chinese-made EVs in its market, there is a possibility of a surge in imports in the future.
Prior to 2023, Chinese-made electric vehicles accounted for only a small portion of Canada’s market, with $84 million in imports from China in 2022. However, as Tesla shifted its vehicles manufactured for Canada from California to China, this number increased significantly to $2.2 billion in 2023. Tesla currently holds almost one-third of the Canadian EV market share. This move was made by Tesla to ensure its American sales qualified for a tax credit available only for EVs produced in North America. While Chinese EV imports have surged in Canada, the government has not decided to implement tariffs like the U.S., but is preparing to do so if necessary.
The Canadian government, along with the Canadian Vehicle Manufacturers’ Association, is considering the implications of the increased Chinese EV imports on the Canadian market. There is a recognition of the need to be prepared for a potential influx of Chinese EVs in the future, which could impact the market and local manufacturers. Canada’s industrial policy and strategy regarding EVs currently do not take into account where EVs are manufactured, posing a challenge in the face of changing global dynamics. It is crucial for Canada to be ready to respond to changes in the EV market, including the possibility of implementing tariffs on Chinese-made electric vehicles should the need arise. The government is closely monitoring the situation and weighing its options to safeguard the Canadian auto industry.
