Canada Plans to Raise Tariffs on Chinese Electric Vehicles

Canada is currently evaluating whether to impose higher tariffs on electric vehicles (EVs) manufactured in China, following the United States' recent significant tariff hikes on these imports. Trade Minister Mary Ng, in a phone interview from Peru where she is attending the Asia-Pacific Economic Cooperation forum, stated, "We are looking at this very carefully and we have an open dialogue with our American partners," as reported by Bloomberg News.

This development comes in the wake of US President Joe Biden's announcement, wherein he detailed substantial tariff increases on various Chinese imports, including electric-vehicle batteries, computer chips, and medical products. Specifically, Biden's administration plans to raise tariffs on Chinese EVs from 25% to 100% under Section 301 of the Trade Act of 1974, culminating in total duties of 102.5%. The move is part of a broader strategy to counteract what the United States perceives as unfair trade practices by China.

"The current actions to counteract China's unfair trade practices are carefully targeted at strategic sectors," the White House said, "The 100% tariff rate on electric vehicles will protect American manufacturers from China's unfair trade practices."

Tesla, one of the leading EV manufacturers, has already begun offering China-made Model 3 and Model Y vehicles for sale in Canada as of last year. The potential tariff increase could impact these sales and the broader market dynamics.

Analysts suggest that the intensifying trade conflict between the U.S. and China could present opportunities for other countries, particularly Mexico, to increase their exports to the US market. Gabriela Siller, Director of Economic-Financial Analysis, Banco Base, noted, "The stronger the trade war between the United States and China, the more potential Mexico has to export to the US market."

While the primary beneficiaries of the US tariff hikes are expected to be domestic companies, secondary gains could accrue to countries like Mexico due to the integrated production chains in North America. "As the US industry strengthens, its main trading partners, including Mexico, gain inertia from the integration of production chains linked to North America," Siller explained.