- 100% tariff on Chinese-made electric cars follows US
- Canada stresses that electric vehicle incentives only apply to free trade partners
- Mexico remains a potential entry point for Chinese automakers into the US
The Canadian government on Monday announced a 100% tariff on imports of Chinese-made electric vehicles.
The 100% tariff, effective October 1, 2024, is roughly the same as the one the US has imposed and follows similar language to the EU’s. The specific tariff items are applied broadly without exception, covering everything from passenger cars to buses and trucks, and fuels ranging from gasoline to electricity and hydrogen fuel cells.
Along with the vehicle tax, Canada also announced a 25% Tariffs on Chinese Steel and Aluminum scheduled to start on October 15, 2024.
Additionally, Canada has gone one step further toward China than the United States has so far: It is restricting Chinese electric vehicles’ eligibility for all federal electric vehicle incentives—for those who have negotiated free trade agreements with Canada. With no restrictions on final assembly requirements or the supply of batteries and minerals for Section 45W, U.S. companies eyeing commercial use or leasing and purchasing Chinese vehicles subject to the new tariffs appear to still be eligible for a rebate of $7,500 or more through “Loopholes” in electric car rental.
Canada’s move after Biden raises taxes by 100%
“China’s deliberate, state-directed policies of overcapacity and lack of rigorous labor and environmental standards threaten workers and businesses in the electric vehicle industry around the world and undermine Canada’s long-term economic prosperity,” Canada’s Finance Ministry said in a press release accompanying the announcement, adding that “special measures are needed to address this unique threat.”
The Biden administration’s tariff hike on China was announced in May and it is positioned directly to keep Chinese electric cars outThe U.S. move would increase tariffs on electric vehicles from 25% to 100% this year and increase tariffs on lithium-ion batteries and battery components from 7.5% to 25% when applied to electric vehicles. A similar tariff increase on lithium-ion batteries imported from China for other applications would apply starting in 2026.
Volvo EX30 2025
That is said to have led to Volvo EX30 delay compact electric cars, a category expected to arrive first as imports from China, followed by European-made vehicles.
Mexico is in the balance—especially when it comes to electric vehicles.
Presidential candidate Donald Trump, who has claimed that Mexico has taken away 34% of auto manufacturing in the United States, has promised to China’s 100% Tariff Takes Another Step Forward—for all vehicles—with policies that pressure automakers to build cars in the United States instead of Mexico.
Mexico remains part of the evolving free trade framework with the United States and Canada. Formerly known as NAFTA, it was only slightly revamped under the Trump administration and renamed the United States-Mexico-Canada Agreement (USMCA).
BYD Dolphin EV – European Specifications
But Mexico is also proving to be a weak point in its defense against the onslaught of cheap Chinese electric vehicles. Under the USMCA, Chinese electric vehicles made in Mexico with Mexican components will still be able to be sold in the United States without facing trade tariffs. So far, the country has No move to strengthen China’s tariff rules.
Europe is still in protest mode and it seems that compared to Chinese electric vehicles, the deployment EU tariff rules may be too late. BYD of China has started selling the Dolphin EV, a highly regarded compact hatchback, for under $30,000 in some EU markets, and the cheaper Seagull can be had for under $20,000 in some markets.
