The federal government in Ottawa is reportedly exploring the removal of its 100 per cent tariff on electric vehicles (EVs) imported from China.
The tariff, announced in August 2024 and officially introduced on October 1, effectively more than doubled import duties on Chinese-manufactured EVs—from a previous rate of 6.1 per cent to 106.1 per cent. The tariff also meant Tesla could no longer export its vehicles from Giga Shanghai to Canada, a problem which has been exacerbated by the current tariff situation with the United States.
The timing of the reconsideration coincides with Prime Minister Mark Carney’s upcoming Asian tour, which includes stops at the ASEAN Leaders’ Summit in Kuala Lumpur and the APEC Summit in Gyeongju, South Korea. According to a report by The Wire China, the government is using the trip to advance what Carney has described as a “strategic relationship” with China.
One of the major forces behind the potential policy shift is pressure from Canada’s agricultural sector. Provincial leaders in Manitoba and Saskatchewan have urged the federal government to drop the EV tariff, citing China’s retaliatory tariffs on Canadian canola and pork as a key obstacle.
Chinese officials have reportedly suggested that lifting the EV tariff could lead to the removal of duties on Canadian agricultural exports, providing much-needed relief for farmers in Western Canada.
Implications for Canada’s EV Market and Supply Chain
Removing the tariff could open the Canadian market to a new wave of affordable Chinese-made electric vehicles from brands such as BYD, Zeekr, and Geely, increasing consumer choice and accelerating EV adoption.
It would also allow Tesla to import the Model 3 from Giga Shanghai, avoiding the 25% tariff on EVs imported from the United States. Tesla has been able to get around this roadblock for the Model Y by importing the electric SUV from Germany and its Giga Berlin factory.
However, not everyone agrees with the idea of rolling back the tariffs. Ontario Premier Doug Ford has been vocal in his opposition, saying earlier this month there’s “no damn way” Canada should remove them. Ford argues that the tariffs are essential to protecting Ontario’s growing auto and battery manufacturing industry—one that has benefited from billions in government subsidies and is expected to create thousands of jobs.
