Canada adds 106% tariff to Chinese EVs

Following closely with the U.S. and parts of Europe, Canada has added tariffs on Chinese EVs imported and sold in Canada. Like the U.S., Canada has been making sizable investments to become a crucial part of the North American EV supply chain over the past few years. Now, it worries that cheaper alternatives from China could undercut all those investments.

The Canadian tariffs go into effect on October 1st, and as of this writing, Tesla is the only automaker that sells made-in-China EVs in Canada. However, there are rumours that BYD, China’s largest EV company, was eyeing a Canadian expansion this year or early 2025. A report from the Canadian Press states that Canada’s government has been in talks with Tesla to have Canadian units shipped from factories outside of China to help skirt the new costs.

The Canadian tariffs used to be a six percent import duty, but the recent announcement has boosted them to 106 percent. The U.S. also has tariffs at around 100 percent, while Europe has a much less aggressive 38 percent tariff. The U.S. enacted such strong financial walls in May, citing unfair advantages given to Chinese automakers by the Chinese government. A report from around that time in The Guardian states that Chinese companies have been able to build 30 million EVs per year but have only managed to sell around 22 million domestically. This means there could be a large pool of cheap EVs already prepared to be launched in the West.

BYD is notable for being able to make low-cost EVs with its ‘Seagull,’ starting at just under $10,000 USD (roughly $13,000 CAD) in China. While the costs of these cars will likely rise with the need for overseas shipping, BYD vehicles were still set to undercut pretty much everything from American automakers like GM and Ford. The new tariffs aim to make it too expensive to import a Chinese car, so people in North America buy local instead.

Notably, Ford shifted its strategy further away from EVs and towards hybrids. It also shelved plans to make a three-row electric SUV during this shift. There are still some exciting EVs coming from European automakers and Tesla, but it seems like the next wave of EVs was going to come from China before the tariffs kiboshed it. However, if BYD or any other Chinese automakers do want to come to North America it seems like they could invest in factories in Mexico to skirt the tariffs since they only apply if the car has been assembled in China.

That’s likely to change now that much of the Western world has enacted tariffs. A report from Reuters suggests that Canada might add tariffs to computer chips and solar cells as well.

Sources: Reuters, Canadian Press, The Guardian, CBC News