Canada’s EV Tariff Dilemma
Canada’s new Liberal government is under pressure to reconsider its 100% tariff on electric vehicles (EVs) from China, a move that critics say contradicts the country’s trade and climate objectives. The tariff, implemented last fall, was intended to align with the United States’ protectionist policies under then-President Joe Biden. However, with the changing political landscape and the impact on Canadian industries, many are now calling for its removal.
The tariff has particularly affected Canadian canola farmers, as China retaliated by imposing its own 100% surtax on Canadian canola oil and meal. This has significant implications for Canada’s agricultural sector, with exports to China amounting to $20.6 million and $918 million respectively in 2024. Andre Harpe, canola farmer and chair of the Canadian Canola Growers Association, emphasized the urgency of addressing these tariffs, stating, “We’re the ones taking the brunt of the hit right now.”
Beyond the agricultural impact, the tariff also poses challenges for Canada’s climate goals. The federal government aims to reduce emissions by 40% below 2005 levels by 2030 and achieve net-zero emissions by 2050. Part of this plan involves promoting the adoption of electric vehicles, with a target of 100% zero-emission vehicle sales by 2035. However, the high cost of EVs remains a barrier for many Canadians. Louise Lévesque, senior policy director at Electric Mobility Canada, noted that Chinese EVs, such as the Seagull from BYD priced at around $13,000 CAD, could fill this affordability gap.
However, there are concerns about the potential impact on Canada’s domestic manufacturing sector. Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association, warned that easing the tariff could undermine the Canadian market by allowing “dumped vehicles” from China to flood the market.
Experts suggest that a balanced approach could be achieved through collaboration with China, particularly in research and development. Niel Hiscox, president of Clarify Group Inc., proposed a “reverse joint venture technology transfer” as a potential solution. Other suggestions include implementing a more targeted tariff, similar to Europe’s approach, or setting a time limit for the tariffs to give the North American industry time to adjust.
As Prime Minister Mark Carney prepares to meet with U.S. President Donald Trump, the decision on the EV tariff will be a significant indicator of Canada’s economic policymaking direction. The move will have far-reaching implications for Canada’s trade relationships, climate goals, and domestic industries.
