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In October 2024, Canada imposed a 100 per cent tariff on all electrical automobile (EV) imports from China, successfully barring shoppers from accessing a number of the world’s most modern, reasonably priced fashions. These tariffs are deepening the nation’s dependence on the USA and undermining its local weather targets.
Canada’s unusually prohibitive tariff mirrored the technique of the U.S., which imposed a 100 per cent responsibility on Chinese language EVs in September 2024.
The federal government justified its “tariff fortress” by pointing to China’s in depth industrial coverage, akin to subsidies, that artificially decrease manufacturing prices. The tariffs have been claimed to guard home producers by offsetting the price benefit loved by Chinese language EV producers.
Whereas this rationale has some foundation, it’s extremely overstated. The European Union’s in-depth investigation into Chinese language assist for the EV business revealed company-specific subsidy ranges, starting from 7.8 per cent for Tesla Shanghai to 35.3 per cent for the SAIC Group, which subsequently turned the idea for imposing countervailing duties.
Agriculture Minister Heath MacDonald lately mentioned the federal government is contemplating scrapping the tariffs — a recognition that the coverage might now be outdated.
A yr in the past, co-ordinating with the U.S. towards China’s rising EV business might need appeared defensible, however right this moment, it leaves Canada in a weakened place in its ongoing commerce battle with the U.S.
This coverage is misaligned with Canada’s long-term pursuits. It weakens financial independence, slows decarbonization and forces Canadians to pay extra for EVs.
Tariffs are distorting Canada’s EV market
In July 2025, Tesla gross sales within the EU fell by 40 per cent at the same time as general EV gross sales rose by 39 per cent. BYD, China’s largest EV producer and a rival to Tesla, tripled its gross sales and moved forward of Tesla in market share.
In Canada, too, Tesla’s gross sales are falling. Its market share is now a fraction of what it was and Basic Motors has lately taken first place in Canadian EV gross sales.
Nonetheless, Canadians proceed to purchase hundreds of Teslas every year, whereas plans to promote BYD and different Chinese language EVs have come to a grinding halt.
The rationale why BYD has risen to the highest within the EU however American automakers dominate in Canada is an consequence of Canada’s commerce coverage towards China, which has had the unintended impact of propping up U.S. automakers.
Canada’s auto market is already closely depending on American producers. Tariffs that deepen this dependence additional slim shopper alternative and expose Canadian EV consumers to unpredictable coverage shifts within the U.S. It’s clear Canada wants a brand new method.
A extra nuanced technique
Canada ought to undertake a extra nuanced technique that safeguards nationwide priorities with out stifling competitors or limiting shopper alternative. As a substitute of erecting tariff partitions that shut out rivals, Canada ought to steadily open its market to organize for the inevitable competitors from China and past.
On the identical time, it ought to provide focused incentives for prime Chinese language EV companies to arrange vegetation domestically, switch superior expertise and share technical know-how.
Such a coverage would assist stabilize automotive costs for Canadians, who’ve been hit arduous amid U.S.–Canada commerce tensions.
Though Ottawa lately suspended most counter-tariffs forward of commerce talks, levies on autos, metal and aluminum stay in place, preserving prices elevated. These retaliatory measures, whereas crucial, have burdened Canadian households, for whom automobile purchases are the third-largest expense.
A freer commerce regime with China would considerably broaden the vary of reasonably priced EVs accessible to Canadians, who’re restricted to expensive U.S. manufacturers averaging greater than US$55,000. Against this, Chinese language producers provide quite a few fashions priced close to US$25,000, an element that may seemingly spur a considerable enhance in EV adoption.
Second, entry to Chinese language EVs would assist Canada meet its bold goal of 100 per cent zero-emission new automobile gross sales by 2035. Since Canada’s electrical energy grid is basically powered by renewable hydro and nuclear energy, a quicker uptake of EVs would considerably scale back emissions.
Third, reducing the tariff would assist Canada’s pursuit of better financial autonomy from the U.S.
A average tariff, mixed with focused incentives to draw international funding from Chinese language EV makers, may improve the worldwide competitiveness of Canada’s auto business. This additionally aligns with the nation’s long-term technique of incentivizing main international EV producers to arrange native operations.
Canada can not hope to steer in an important international business by shutting itself off from competitors. It should dismantle tariff partitions, welcome world-class rivals and appeal to new funding. Solely by diversifying its EV provide chain and fostering innovation can Canada safe a key place within the rising EV financial system.
Addisu Lashitew, Affiliate professor, McMaster College
This text is republished from The Dialog underneath a Artistic Commons license. Learn the unique article.
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