top of page

If Canada follows U.S. lead on Chinese EV tariffs, impact could be huge



As the U.S. ramps up tariffs on Chinese electric vehicles (EVs) and other critical goods, there’s growing speculation about whether Canada might follow suit. President Joe Biden’s administration has increased tariffs significantly on Chinese imports, including EVs, semiconductors, batteries, solar cells, and critical minerals, affecting around $18 billion of annual imports. This move aims to protect American industries from what Biden describes as unfair Chinese trade practices.


Ian Lee, a management professor at Carleton University, highlights that China's EV market dominance—holding a 60% global market share—poses a significant challenge to North American manufacturers. The tariffs are intended to shield the U.S. EV sector from Chinese competition, but they could also complicate Canada’s efforts to grow its own EV industry.


If Canada were to impose similar tariffs, the consequences could be severe. “It would make EVs unaffordable for most people except for perhaps the top 20 percent of the population,” Lee warns. The high costs could provoke political backlash and hinder Canada’s goal of making all new car sales zero-emission by 2035.


The Biden administration is also monitoring Chinese automotive companies' activities in Mexico, concerned they might use Mexican plants to bypass U.S. tariffs. BYD Co., a leading Chinese EV manufacturer, is already in talks to establish an EV plant in Mexico, further complicating the trade landscape.


European leaders, including German Chancellor Olaf Scholz and Swedish Prime Minister Ulf Kristersson, have advised against following the U.S. approach. They argue that imposing similar tariffs could disrupt global trade and harm industrial nations like Germany and Sweden.


For Canada, the stakes are high. The federal government, alongside provincial governments, has invested heavily in attracting EV manufacturers like Honda and Stellantis. Introducing tariffs could jeopardize these efforts and force Canada to reassess its ambitious EV targets or find alternative solutions to meet its 2035 goals.


In summary, while mirroring U.S. tariffs might protect Canadian industries in the short term, it could also make EVs less accessible and derail Canada's zero-emission targets, presenting a complex trade-off for policymakers.


1 view

Comments


service.png
  • Instagram
  • Facebook
  • Twitter
  • LinkedIn
  • YouTube
  • TikTok
Email Support Photos_Square.png
bottom of page