MNI BRIEF: Canada Sets 100% Tariff On Chinese EVs, Mirrors US

MNI (OTTAWA) - Canada is imposing a 100% tariff on Chinese electric vehicles and a 25% levy on steel and aluminum, seeking to head off any perception it will become a back door to the North American trade zone before the USMCA is up for review in 2026.

Finance Minister Chrystia Freeland in a statement Monday also said Canada will restrict eligibility for any low-emissions vehicles to nations it has a free trade agreement with, and launched a 30-day consultation on "other sectors critical to Canada’s future prosperity, including batteries and battery parts, semiconductors, solar products, and critical minerals."

U.S. President Joe Biden in May announced tariffs on Chinese EVs would rise from 25% to 100% and the EU has also recently imposed new restrictions. Three-quarters of Canada's exports go to the United States and its large auto industry relies on seamless movement of parts across the Michigan-Ontario border. Montreal-Based National Bank Financial analysts wrote in a June 6 report that “in an effort to avoid American tariffs, China is rerouting goods through intermediary countries” including autos via Mexico, and “because Canada has extremely low import tariffs on Chinese EVs (about 6%), it could see more of these vehicles diverted its way.” (See: MNI POLICY: Canada Fears US Reaction To Mexico-China Auto Ties)