In a move that could reshape Canada’s electric vehicle (EV) landscape, Deputy Prime Minister Chrystia Freeland has announced that the Canadian government is contemplating imposing import tariffs on Chinese-made EVs. This decision stems from concerns over what Freeland describes as China’s “state-directed policy of overcapacity,” which she argues creates unfair competition for Canadian automakers.

Freeland highlighted that the proposed tariffs are part of a broader effort to protect the domestic auto sector against global oversupply orchestrated by Chinese producers. She emphasized that Canada will launch a 30-day public consultation starting July 2nd to gather opinions on the potential tariffs and determine the most effective policy response.

The initiative echoes similar actions taken by Canada’s allies. Recently, the United States under President Joe Biden implemented steep tariff increases on various Chinese imports, including electric vehicles. Similarly, the European Commission is planning additional duties on Chinese EV manufacturers such as BYD, Geely, and SAIC, as well as Chinese-built Tesla and BMW cars.

Despite these moves, China has consistently refuted allegations of unfair subsidies or overcapacity issues in its EV industry. Chinese authorities argue that their advancements in technology and market advantages have naturally propelled their EV sector’s growth.

The potential tariffs on Chinese EVs have sparked a debate within Canada, with proponents arguing for protective measures to safeguard local jobs and enhance Canada’s role in the global EV supply chain. Ontario’s premier has notably advocated for tariffs of at least 100% on Chinese-made EVs to bolster the province’s auto manufacturing sector, a sentiment reflecting broader domestic pressure on the Canadian government.

Freeland emphasized that all options, including tariffs on EV components like batteries, are being considered, underscoring Ottawa’s commitment to employing its strongest trade tools in this matter. The decision, once finalized after the public consultation, could significantly impact Canada’s stance in the global EV market and its diplomatic relations with China.

As Canada navigates this pivotal moment in its automotive industry, stakeholders, including consumers, manufacturers, and policymakers, are encouraged to participate in the upcoming public consultation to shape the future of Canadian EV policy.

This move underscores Canada’s strategic efforts to assert itself in the global automotive industry while addressing concerns of unfair competition and economic sovereignty in the EV sector.