Canada Imposes 100% Duty on Chinese-Made Electric Vehicles

By David Ljunggren
OTTAWA (Reuters) – Before Canada announced this week a 100% duty on Chinese-made electric vehicles (EVs), Tesla approached Ottawa requesting a lower tariff on its vehicles, according to a Canadian government source.

On Monday, following the lead of the United States, Canada declared that it would levy tariffs on all Chinese-made vehicles sold in the country, citing China’s intentional, state-directed policy of over-capacity.

These duties, effective from October 1, will apply to all EVs shipped from China, including Tesla models. Canada had previously indicated its intention to impose such tariffs back in June.

The source, who preferred to remain anonymous due to the sensitive nature of the situation, revealed that Tesla had made its approach before the official announcement was made, asking for a tariff rate similar to that which it received in the European Union.

While Tesla does not disclose its Chinese exports to Canada, vehicle identification codes have shown that the Model 3 compact sedan and Model Y crossover were being exported from Shanghai to Canada.

This month, the EU changed its stance towards Tesla, implementing a 9% tariff on vehicles manufactured in China by the company, compared to a 36.3% tariff on other Chinese EV imports.

The EU based Tesla’s tariff solely on direct subsidy costs, while Canada and the U.S. considered subsidies, industrial over-capacity, non-market policies, as well as environmental and labor standards.

Since Monday, Tesla has not reached out to Ottawa, according to the source. Tesla did not immediately provide comments on the matter.

The office of Canada’s Finance Minister, Chrystia Freeland, responsible for tariffs, declined to comment on discussions with Tesla.

In 2023, Canadian automobile imports from China to Vancouver surged 460% year-over-year, totaling 44,356 vehicles, as Tesla began shipping EVs from Shanghai to Canada.

In May, U.S. President Joe Biden announced a significant increase in tariffs on Chinese electric vehicles to 100%, along with other duties on semiconductors, solar cells, and lithium-ion batteries. Tesla hasn’t shipped any models made in China to the U.S. market as of July 2023.

Although the U.S. tariffs are delayed until September, there’s potential for adjustments to be made this week.

Volvo Cars is assessing the impact of the increased tariffs in Canada, stating it imports select models from China but did not disclose specific numbers.

Swedish EV manufacturer Polestar is also reviewing the implications of the new Canadian tariffs, as it ships the Polestar 2 from China to Canada.