Canada to start 30-day consultation to impose surtax on Chinese electric vehicles

The Canadian government is currently conducting an investigation into the possibility of implementing a surtax on Chinese-made electric vehicles (EVs). The decision to initiate a 30-day consultation period, beginning on July 2, was prompted by Deputy Prime Minister Chrystia Freeland’s assertion that Chinese companies are intentionally creating a global oversupply.

This move by Canada follows similar actions taken by the United States and the European Commission, who recently announced plans to impose higher import tariffs on Chinese EVs in the coming months.

Freeland emphasized the importance of Canada’s automotive sector, which supports approximately 550,000 well-paying jobs. She expressed concern that China’s deliberate policy of overcapacity is creating unfair competition, undermining Canada’s ability to compete in both domestic and global markets for EVs.

During the consultation period, the Canadian government aims to gather input regarding the factors driving China’s surge in EV exports. This includes examining potential unfair market practices, as well as labor and environmental standards.
The consultation will also examine whether Canada should modify the vehicles eligible for the federal EV purchase rebate, which currently offers up to $5,000 Canadian ($3,661) per vehicle.

Furthermore, the consultation will explore the possibility of expanding investment restrictions in Canada.

At present, the only Chinese-made EVs imported into Canada are from Tesla’s Shanghai factory. There are currently no Chinese-branded EVs being sold or imported.

Freeland emphasized that Canada will coordinate its actions with its allies in the United States and the European Union. She highlighted the integrated auto sector in North America and assured that the Canadian government will prevent the country from becoming a dumping ground for Chinese oversupply.

U.S. President Joe Biden has previously criticized Chinese government subsidies for EVs and other consumer goods, arguing that they give Chinese companies an unfair advantage in global trade by eliminating the need for profitability.