Looks like even Tesla will be facing massive tariffs in Canada now
On Monday, Canada joined the United States and the European Union in imposing significant tariffs on Chinese imports. Effective 1 October 2024, Canada will impose a 100 Percent tariff on all Chinese-made electric vehicles (EVs) and a 25 percent tariff on imported steel and aluminium from China.
This move extends to all EVs from China, including those produced by Tesla. Following the announcement, Tesla’s shares fell by 3.2 percent. In 2023, Canadian imports of Chinese automobiles surged by 460 percent year-over-year, with Vancouver becoming a major entry point for these vehicles, including Tesla’s Shanghai-manufactured models.
Moreover, Prime Minister Justin Trudeau defended the tariffs, stating they are a response to China’s state-directed overcapacity and unfair trade practices. Trudeau emphasised that Canada’s actions align with global efforts to address trade imbalances. China’s Commerce Ministry condemned Canada’s decision, arguing it would disrupt global industrial and supply chains and undermine international economic and trade rules.
China is Canada’s second-largest trading partner, although it lags behind the U.S. in terms of trade volume. Tesla has not disclosed specific figures on its Chinese exports to Canada, but vehicle identification codes indicate that models like the Model 3 and Model Y are shipped from Shanghai to Canada.
On top of that, the Canadian government clarified that the 100 percent tariff applies to all Chinese-made EVs. Companies moving their production outside China would avoid this tariff. Seth Goldstein, an equity strategist at Morningstar, suggested that Tesla might adjust its logistics and consider exporting vehicles to Canada from its U.S. production facilities in response to the tariffs.
This shift could increase costs and impact Tesla’s profits, contributing to the recent drop in its stock price. The EU recently adjusted its stance by imposing a lower tariff rate of 9% on Tesla compared to the higher rates on other Chinese EV imports.
Canada’s trade with China includes substantial imports of petroleum, rapeseed, iron ore, and non-monetary gold. Despite these volumes, China does not rank among the top 10 export destinations for Canadian steel and aluminium.
U.S. President Joe Biden had previously announced a quadrupling of tariffs on Chinese EVs to 100 percent and additional tariffs on other strategic goods. Canada’s new tariffs reflect its strategic positioning in the global EV supply chain and pressure from domestic industries to act against Chinese trade practices.
We got all this from Reuters and their full article is linked here. Thank you Reuters for the information and images.
