Canada introduces surtaxes on Chinese imports to protect key industries

On August 26, 2024, the federal government of  Canada had announced the introduction of a 100% surtax on all Chinese-made electric vehicles (EVs), effective October 1, 2024. In addition, a 25% surtax will be applied to steel and aluminum imports from China under section 53 of the Customs Tariff, starting October 22, 2024. This move aims to safeguard Canadian industries from China's non-market practices, which have resulted in overcapacity and an uneven playing field in global markets.

Deputy Prime Minister and Minister of Finance, Chrystia Freeland, emphasized that these measures are necessary to protect Canadian workers and businesses, particularly in the steel and aluminum sectors. “We are moving in lock-step with key international partners to protect Canadian workers and businesses in our steel and aluminum sectors from China’s intentional, state-directed policy of overcapacity and oversupply,” Freeland said, adding that Canada is taking decisive steps to ensure a level playing field.

The Canadian government also launched consultations in September 2024 on the potential expansion of surtaxes to protect other critical manufacturing sectors. These consultations will remain open for stakeholder feedback until October 10, 2024, with the aim of determining additional measures to bolster the country’s manufacturing base.

The government is aware of concerns from stakeholders about the need for more time to adjust supply chains. As a result, a framework for requesting tariff relief will be introduced, considering exceptional circumstances such as short supply or certification requirements. Details on this framework will be announced before the surtaxes come into effect.

In addition to the tariffs on steel and aluminum, the 100% surtax on Chinese-made EVs will also apply to certain hybrid vehicles, trucks, buses, and delivery vans. These measures are part of a broader effort to protect Canadian industries from unfair competition while encouraging the growth of domestic manufacturing. “Canada has proud auto, steel, and aluminum sectors... and we are continuing to take concrete actions to strengthen our domestic supply chains,” said François-Philippe Champagne, Minister of Innovation, Science, and Industry.

The government plans to review these measures within one year, with the possibility of extending them if necessary. Jonathan Wilkinson, Minister of Energy and Natural Resources, highlighted the long-term importance of these steps: “Today, we are taking further action to protect Canadian workers from China’s unfair, non-market practices... Canadian workers and businesses will be front and centre in seizing the economic opportunity this demand presents.”

As Canada moves forward with these protective measures, the government remains committed to aligning its policies with international partners, including the United States and Mexico, which have raised similar concerns about Chinese trade practices. The government’s net-zero economic plan, which includes $160 billion in investments, is aimed at fostering growth in critical sectors like EV manufacturing, batteries, and clean energy technologies.

Canada’s strong stance reflects its determination to safeguard key industries and ensure a competitive future for its economy while addressing the environmental challenges of the net-zero transition.

Source: Canadian Government, Photo: Fotolia