Canada to start 30-day consultation to impose surtax on Chinese electric vehicles

FILE - Deputy Prime Minister and Minister of Finance Chrystia Freeland holds a press conference in Ottawa, Ontario, on Tuesday, April 16, 2024. Canada’s government is investigating whether to impose a surtax on imports of Chinese-made electric vehicles. (Sean Kilpatrick/The Canadian Press via AP, File)

TORONTO (AP) — Canada's government is investigating whether to impose a surtax on imports of Chinese-made electric vehicles.

A 30-day consultation on the issue will begin on July 2 to counter what Deputy Prime Minister Chrystia Freeland said Monday is a clear effort by Chinese companies to generate a global oversupply.

Canada’s move comes weeks after both the United States and the European Commission announced plans to impose higher import tariffs on Chinese EVs this summer.

“Our automotive sector supports nearly 550,000 good paying Canadian jobs,” Freeland said. “Canadian workers and the auto sector are facing unfair competition from China's intentional state directed policy of overcapacity that is undermining Canada's EV sector ability to compete in domestic and global markets.”

The consultation will seek input on what is driving China’s surging EV exports, including unfair market practices as well as labor and environmental standards.

In addition to a surtax, the consultation will consider whether Canada should change which cars are eligible for the federal EV purchase rebate worth up to $5,000 Canadian ($3,661) per vehicle.

It will also look at whether to expand investment restrictions in Canada.

Right now the only Chinese-made EVs imported into Canada are from Tesla, made at the company’s Shanghai factory. There are no Chinese-branded EVs sold or imported at the moment.

Freeland said Canada will act in concert with its allies in the United States and the European Union. She noted North America has an integrated auto sector, and said her government would ensure Canada doesn't become a dumping ground for Chinese oversupply.

U.S. President Joe Biden has said Chinese government subsidies for EVs and other consumer goods ensure that Chinese companies don’t have to turn a profit, giving them an unfair advantage in global trade.