The Biden administration announced this week that it will increase the import tariffs on Chinese-made electric cars by four times. However, Chinese-made electric cars, especially Tesla produced in Shanghai, continue to pour rapidly into Canada, causing concerns among local car industry players who hope Canada will follow the United States in implementing more protection measures.
In recent years, the import volume of Chinese electric cars in Canada has surged, especially Tesla models produced in Shanghai. Last year, the number of Chinese-made Teslas arriving in the port of Vancouver increased by over five times, reaching 44,400 vehicles.
This situation has sparked protests among some car industry professionals who hope that the Canadian authorities will follow the United States in taking more measures to protect domestic industries.
Canada currently imposes only a low tariff of about 6% on Chinese-made cars, and Canada also allows consumers to apply for a federal tax rebate program when purchasing foreign-made electric vehicles. Last year, many Canadian car owners who purchased Chinese-made Teslas applied for this incentive measure.
In contrast, the U.S. government stipulates that if electric vehicle battery components and key minerals are produced by “foreign entities of concern” such as China and Russia, then they are not eligible for a $7,500 tax credit.
This week, the Biden administration further announced that the import tariff on Chinese electric cars will be adjusted to four times, with the overall tax rate increasing significantly from the current 27.5% to 102.5%.
Flavio Volpe, Chairman of the Canadian Automotive Parts Manufacturers Association, told Bloomberg, “Here, you can purchase a Tesla car manufactured in Shanghai and receive a $5,000 car purchase incentive, funded by Canadian taxpayers.”
Volpe stated that Canadian car manufacturers have raised this issue multiple times, but the authorities have yet to make any changes.
On Friday, Canadian Minister of Trade Mary Ng stated that following the U.S.’s announcement of increased import tariffs on Chinese-made electric cars, Canada is considering whether to follow suit and raise tariffs.
While attending an economic conference in Peru, Ng stated in a phone interview with Bloomberg, “We are closely studying this issue, and we have had open dialogues with our U.S. partners.”
“We will definitely take this into consideration,” she said.
According to data from the Canadian Department of Transportation, in the past year ending on March 31st, out of every 10 electric car buyers applying for the Canadian federal tax rebate incentive, about 3 purchased Teslas, totaling around 51,000 vehicles. Local governments like British Columbia also offer additional rebates worth thousands of Canadian dollars for electric car buyers.
For Chinese cars, Canada remains a relatively new market compared to Asian countries exporting electric cars to Canada, where Japan and South Korea still dominate. But as the U.S. further raises tariffs, more Chinese electric cars may flood into Canada.
Similar to the U.S., the proportion of electric cars in the Canadian automotive market remains relatively low. Authorities offer subsidies to increase the proportion of electric cars and have set ambitious goals: aiming for 20% of new cars domestically sold to be fully electric or hybrid-powered by 2026, planning to increase this to 60% by 2030, and targeting all domestically sold cars to be built with zero carbon emissions by 2035.
Many, including Volpe, believe these goals are too aggressive and argue that Canada should set goals similar to the United States.
According to models from the U.S. Environmental Protection Agency, the recent emission regulations for cars could see electric vehicles’ market share exceed 50% by 2032.