Canada to slap 100% tariff on Chinese electric vehicles

Prime Minister Justin Trudeau on Monday announced a 100% tariff on imports of Chinese-made electric vehicles, joining the United States and European Union in imposing higher duties.

The decision was taken in response to what Canada identified as an effort by Chinese companies to generate a global oversupply.

What the Canadian PM said

"Actors like China have chosen to give themselves an unfair advantage in the global marketplace," Trudeau said at a cabinet meeting in Halifax, Nova Scotia.

Ottawa is also set to place a 25% tariff on imported steel and aluminum from China, Trudeau said. The levies come after a 30-day public consultation on Chinese electric vehicles and related products.

"I think we all know that China is not playing by the same rules," Trudeau said.

"What is important about this is we're doing it in alignment and in parallel with other economies around the world," he said.

Ottawa seeks to position Canada as a critical part of the global electric vehicle supply chain and has been under pressure domestically to act against China. To bolster its manufacturing heartland, Canada has signed deals worth billions of dollars with European automakers in all parts of the chain.

China responds with 'strong dissatisfaction'

The 100% tariff on Chinese vehicles was met with "strong dissatisfaction" by Beijing's embassy.

"This move is typical trade protectionism and politically motivated decision," a spokesperson said in a statement on the embassy's website. "It will damage trade and economic cooperation between China and Canada, hurt the interests of Canadian consumers and enterprises (and) slow down the green transition process of Canada."

Response to 'extraordinary threat'

Both the US and EU in recent months imposed tariffs on Chinese EVs of 100% and 38%, respectively. At a news conference in Halifax on Canada's Atlantic coast, Trudeau said Chinese electric vehicle overproduction and hefty state subsidies for its auto sector "requires us to take action."

"Unless we want to get in a race to the bottom, we have to stand up, and that's what we're doing," he said. The government called the tariffs a response to "this extraordinary threat."

Beijing has threatened wide-ranging retaliation to the duties imposed by Brussels, something that could hit Germany particularly hard.

Germany — for which China is a key market — abstained in a July vote by EU member states on imposing the provisional tariffs on the Chinese vehicles. German carmakers — which made a third of their sales last year in China — are particularly concerned about any blowback. 

Berlin is seeking a consensus that would see the preliminary tariff measures reversed.

rc/wd (AP, Reuters)