Tesla contacted Ottawa and requested a lower tariff on its cars. This request came before Canada announced a 100% duty on electric vehicles built in China, a Canadian government source said on Wednesday.
Canada announced on Monday that it would impose tariffs on all vehicles manufactured in China sold within its borders. This decision follows the United States’ example and is in response to what Canada described as China’s deliberate, state-directed program of overcapacity.
The taxes, which go into effect on October 1st, are applicable to all EVs transported from China, including Tesla vehicles. Ottawa had announced its plan to implement tariffs in June.
Given the delicate nature of the matter, the insider, who wished to remain anonymous, claimed that Tesla had already contacted Canada prior to the formal announcement. According to the source, the carmaker requested a rate comparable to what it was given in the European Union.
Tesla does not reveal the products it ships from China to Canada. Nevertheless, Model Y crossovers and Model 3 compact sedans were being shipped from Shanghai to Canada, according to vehicle-identification numbers.
This month, the EU eased its stance on Tesla by imposing a 9% duty on the company’s Chinese-made vehicles. In contrast, it applied a 36.3% tariff on other Chinese EV imports.
The source stated that the US and Canada considered subsidies, industrial overcapacity, non-market regulations, and environmental and labor norms when determining their tariff for Tesla. In contrast, the EU only took direct subsidy costs into account.
According to the source, Tesla hasn’t spoken to Ottawa since Monday.
Tesla did not respond to requests for comment right away.
The Canadian Finance Minister’s office, led by Chrystia Freeland, who is ultimately in charge of tariffs, chose not to comment on the Tesla negotiations.
Tesla started importing electric vehicles manufactured in Shanghai to Canada in 2023. As a result, car imports from China at Vancouver, the country’s largest port, increased by 460% annually, reaching 44,356 vehicles.
In May, U.S. President Joe Biden announced new 25% tariffs on lithium-ion batteries and other key commodities. He also doubled the taxes on semiconductors and solar cells to 50% and increased tariffs on Chinese electric vehicles to 100%. A business letter sent in July 2023 to the U.S. Environmental Protection Agency states that Tesla has never imported vehicles built in China into the American market.
The U.S. tariffs are not expected to go into effect until September, and this week there is a chance that the scheduled charges may be loosened.
Volvo Cars declared that it was investigating the potential impact of the higher tariffs in Canada. The Swedish automaker said it sent EX30, XC60, and a small quantity of S90 cars into Canada from China, but it withheld the precise figure.
China’s Geely and Sweden’s Polestar, which makes electric vehicles, export the Polestar 2 to Canada. The business stated that it was analyzing the effects of the Canadian tariff.
Click here for more Business news.