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Should Canada ease its 100% tariff on electric vehicles from China amid trade war with U.S.?

Should Canada ease its 100% tariff on electric vehicles from China amid trade war with U.S.?

  • 20.03.2025 08:32
  • msn.com
  • Keywords: danger, success

Canada is considering easing its 100% tariff on Chinese electric vehicles amid a trade war with the U.S. Some economists suggest this could promote EV adoption and reduce dependence on Tesla, but Canadian automakers advocate for maintaining tariffs to safeguard their industry.

Tesla ProductsBYDDYsentiment_dissatisfiedTSLAsentiment_satisfied

Estimated market influence

BYD

BYD

Negativesentiment_dissatisfied
Analyst rating: Strong buy

BYD's entry into the Canadian market is seen as a threat to local automakers.

Tesla

Tesla

Positivesentiment_satisfied
Analyst rating: Neutral

Tesla's dominance in Canada makes it a key player in the EV market, influencing policy decisions.

Context

Analysis and Summary: Should Canada Ease Its 100% Tariff on Electric Vehicles from China?

Current Situation

  • Tariffs on Chinese EVs: Canada imposed a 100% tariff on electric vehicles (EVs) made in China last fall, mirroring U.S. actions.
  • Retaliatory Measures: China responded with 100% tariffs on Canadian rapeseed oil, oil cakes, and pea imports, as well as a 25% duty on Canadian aquatic products and pork.

Arguments for Easing Tariffs

  • Economic Impact: Some economists suggest easing tariffs could boost EV sales in Canada and reduce reliance on U.S. trade policies.
  • Market Competition: Chinese EVs, like BYD's Seagull (starting at $14,600 CAD), are cheaper than current options in Canada, potentially spurring market growth.
  • Strategic Alignment: Aligning with the European Union's approach—increasing tariffs while incentivizing foreign investment—could be a balanced strategy.

Industry and Automaker Responses

  • Support for Tariffs: Canadian automakers and industry leaders argue that tariffs protect the nascent EV industry and prevent market flooding by cheaper Chinese models.
  • Investment Concerns: Investments in Canadian EV production could be at risk if Chinese vehicles dominate the market, given China's capacity to meet 80% of global vehicle demand.

Expert Opinions

  • Economist Views: Experts like Julian Karaguesian and Sumeet Gulati suggest Canada should pursue independent trade policies rather than aligning solely with U.S. interests.
  • Climate Goals: Reducing tariffs could accelerate EV adoption, crucial for meeting Canada's target to phase out gas-powered vehicles by 2035.

Competitive Dynamics

  • Tesla's Dominance: Tesla remains the top-selling EV in Canada, despite calls from some politicians to impose tariffs on the company due to its ties to U.S. President Trump.
  • Global Trade Strategy: The article highlights the delicate balance between protecting domestic industries and fostering international trade relationships.

Long-Term Implications

  • Trade Relations: Easing tariffs could strain relations with the U.S., which views Canada as a "vassal state." However, it might strengthen ties with China and other global markets.
  • Market Development: Allowing more competition could drive innovation and lower prices, benefiting Canadian consumers while supporting local EV production.

Conclusion

The debate over easing tariffs on Chinese EVs reflects broader tensions in Canada's trade policies. While protecting domestic industries is crucial, economic experts argue that fostering international competition and aligning with global trade norms could yield long-term benefits for Canada's EV market and environmental goals.