Elon Musk’s Tesla in danger after Canada slaps 100% tariff on Chinese electric vehicles at trade standoff

The announcement came after encouragement from US national security adviser Jake Sullivan during a meeting with Canadian Prime Minister Justin Trudeau and cabinet ministers on Sunday. Sullivan makes his first visit to Beijing on Tuesday.

Trudeau said Canada would also impose a 25 percent tariff on Chinese steel and aluminum. “Actors like China have chosen to give themselves an unfair advantage in the global market,” he said.

There was no immediate response from China.

One of the Chinese-made electric vehicles imported into Canada is from Tesla, manufactured at the company’s factory in Shanghai, although the American company could avoid the tariff by switching to supplying Canada from factories in the US or Germany.

Chinese brands are not yet a player in Canada. However, Chinese EV giant BYD established a Canadian corporate entity last spring and has indicated it plans to try to enter the Canadian market as early as next year.

Chinese officials are likely to raise concerns about US tariffs with Sullivan as Beijing continues to repair its economy after the COVID-19 pandemic. US President Joe Biden has imposed new major tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.

“The United States believes that a united front, a coordinated approach to these issues benefits all of us,” Sullivan told reporters on Sunday.

Biden said the Chinese government’s subsidies for electric vehicles and other consumer goods ensure that Chinese companies don’t have to make a profit, giving them an unfair advantage in global trade.

Chinese companies can sell electric vehicles for as little as $12,000. China’s solar cell factories and steel and aluminum plants have enough capacity to meet much of the world’s demand. Chinese officials argue that their production keeps prices low and would help a transition to a green economy.

“We’re doing it in alignment, in parallel, with other economies around the world that recognize that this is a challenge that we all face,” Trudeau said of the new tariffs. “If we’re not all going to have a race to the finish, we’ve got to stand up.”

Deputy Prime Minister Chrystia Freeland said Canada will also launch a 30-day consultation on possible tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals and solar panels.

“China has a deliberate, state-led policy of overcapacity and oversupply designed to cripple our own industry,” Freeland said. “We simply will not allow this to happen to our electric vehicle sector, which has shown so much promise.”

The only Chinese-made electric vehicles currently imported into Canada are from Tesla, manufactured at the company’s factory in Shanghai.

Canada “had to go with the US position when you think about the economic integration that we have with the US. More than 75% of our exports go to the US,” said a former Canadian ambassador to China, Guy Saint-Jacques.

Saint-Jacques said Canada can expect retaliation from China in other industries, adding that barley and pork are candidates because the Chinese can source them from other countries.

“China will want to send a message,” he said.