Before Canada announced this week that it would be imposing a 100% tariff on Chinese-manufactured electric vehicles (EVs), Tesla had already approached Ottawa to request a lower tariff on its vehicles, according to a Canadian government source on Wednesday. Following in the footsteps of the United States, Canada declared on Monday that it was implementing the tariff on all Chinese-made vehicles sold within the country.
The reason cited was China’s deliberate, state-controlled policy of overproduction. These duties, which take effect on October 1, will apply to all EVs imported from China, including those manufactured by Tesla. In June, the Canadian government had signaled its intention to impose such duties.
The source, who spoke on the condition of anonymity due to the sensitive nature of the situation, revealed that Tesla had approached Canadian officials prior to the formal announcement. The company requested a tariff rate similar to the one it was granted in the European Union, the source added.
While Tesla does not publicly disclose its Chinese export figures to Canada, vehicle identification codes have indicated that Tesla’s Model 3 compact sedan and Model Y crossover models were being exported from its Shanghai factory to Canada. Earlier this month, the European Union showed some leniency towards Tesla by imposing a 9% tariff on vehicles made by the company in China, compared to the 36.3% rate it applied to other Chinese EV imports.
The European Union considered only direct subsidy costs when determining its tariff for Tesla. In contrast, the United States and Canada took into account a broader range of factors, including subsidies, industrial overcapacity, non-market policies, as well as environmental and labor standards, according to the source.
The source also mentioned that Tesla has not reached out to Ottawa since Monday’s announcement. Tesla was not immediately available to comment on the situation. When contacted, the office of Canada’s Finance Minister, Chrystia Freeland, who is responsible for overseeing tariffs, declined to discuss any talks held with Tesla.
In 2023, Canadian imports of automobiles from China through the country’s largest port, Vancouver, surged by 460% year over year to 44,356 units, coinciding with Tesla’s commencement of Shanghai-made EV shipments to Canada. Earlier this year, in May, U.S. President Joe Biden announced a significant increase in tariffs on Chinese electric vehicles, quadrupling them to 100%.
Additionally, duties on semiconductors and solar cells were doubled to 50%, while new 25% tariffs were introduced on lithium-ion batteries and other strategic goods. Tesla, according to a company letter sent to the U.S. Environmental Protection Agency in July 2023, has never shipped China-made models to the U.S. market.
The implementation of the U.S. tariffs has been postponed until September, with the possibility that the planned duties might be reduced later this week. In response to the increased tariffs in Canada, Volvo Cars stated that it was assessing the potential impact. The Swedish carmaker imports the EX30 and XC60 models, as well as a limited number of S90s, from China to Canada but did not provide specific figures.
Meanwhile, Swedish electric vehicle manufacturer Polestar, which is partly owned by Volvo Cars and China’s Geely, ships the Polestar 2 from China to Canada. Polestar is currently evaluating the implications of the Canadian tariff on its operations.
Tesla, Inc. is a leading electric vehicle and clean energy company founded by Elon Musk. Known for revolutionizing the automotive industry, Tesla designs and manufactures electric cars, battery energy storage systems, and solar products. Its innovative vehicles, such as the Model S, Model 3, and Model Y, emphasize sustainability, cutting-edge technology, and high performance.
