The Canadian Government is introducing a large tax on Chinese-made electric vehicles (EVs) to encourage consumers to buy Canada-made goods.
Finance Minister Chrystia Freeland has announced a 100% surcharge on all Chinese-made EVs from 1 October 2024, along with a 25% tax on Chinese steel and aluminium products from 15 October 2024.
The goal is to “level the playing field” for Canadian workers and allow the country’s EV industry and steel and aluminium producers to compete in domestic, North American, and global markets.
The tax on Chinese-made EVs includes electric and certain hybrid passenger automobiles, trucks, buses, and delivery vans. It will also be added on top of the ‘Most-Favoured Nation’ import tariff of 6.1% that currently applies to EVs produced in China and imported into Canada.
Last year, China’s annual EV exports jumped to US$47.2 billion ($69.64 billion), from US$200 million in 2018.
Meanwhile, data from Statistics Canada shows the value of Chinese EVs imported by Canada in 2023 spiked to C$2.2 billion ($2.41 billion), up from less than C$100 million in the previous year.
The Asian powerhouse has also increased its steel production by 18.6 million tonnes – more than Canada’s total production capacity – since 2018, making it the world’s largest steelmaker with over 1 billion tonnes produced in 2023.
Similarly, China’s primary aluminium capacity has grown from 11% of global production share to 59% over the last two decades, with the government investing up to US$70 billion between 2013 and 2017 alone, according to the Organisation for Economic Co-operation and Development.
“Canada is home to the talented workers, raw materials, clean electricity, and specialised production capabilities needed to build electric vehicles, and that is why our EV supply chain potential is ranked first in the world,” Freeland says.
“Canadian workers and critical sectors, including steel and aluminium, however, are facing an intentional, state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets.
“That is why our government is moving forward with decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners.”
Over 125,000 are directly employed in Canada’s car manufacturing sector, while over 130,000 are employed in the steel and aluminium industries.
Minister for Innovation, Science and Industry François-Philippe Champagne says the auto supply chain in Canada supports nearly 550,000 direct and indirect jobs, and automotive is one of the country’s largest export industries.
The government has released an initial list of goods subject to new import taxes for public comment, with the final list to be released on 1 October 2024 and to take effect on 15 October 2024.
The Canadian Government is also launching a second 30-day consultation period concerning other sectors critical to Canada’s future prosperity, including batteries and battery parts, semiconductors, solar products, and critical minerals.
According to BloombergNEF, China’s battery production in 2023 was, on its own, sufficient to meet total global demand.
Write to Angela East at Mining.com.au
Images: Unsplash
