Canada May Remove 100 Percent Tariff On Chinese Made Cars

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There is a rumor flying around the interwebs that Canada is considering a plan that would remove its current 100 percent tariff on electric cars manufactured in China. According to CnEVPost, the Canadian prime minister Mark Carney is currently visiting a number of Asian countries.

In August 2024, Canada added a 100 percent tariff on top of the 6.1 percent tariff that had been imposed on vehicles imported from China previously. The additional tariff was intended to support the US, which also imposed a 100 percent additional tariff on Chinese cars to protect the US auto industry.

Carney’s itinerary will take him to Malaysia, Singapore, and South Korea. Along the way, he will attend the ASEAN Leaders’ Summit in Kuala Lumpur and the Asia-Pacific Economic Cooperation (APEC) Summit in Gyeongju, South Korea, that begins on October 31. He is said to be seeking to establish a “strategic relationship” with China while also aiming to hold talks with Chinese leaders during the APEC summit, according to Bloomberg.

A press officer for Carney said the prime minister believes firmly in talking to everyone as he seeks new strategic partnerships for Canada. He has been clear about areas in which China and Canada can and cannot cooperate. His goal is to further Canada’s interests and build out good opportunities for Canadian industries.

Carney met Chinese Premier Li Qiang in New York last month and the two committed to continued engagement, including at the “highest levels” of government. The G20 Summit in South Africa in late November will be another opportunity for Carney and Xi Jinping to meet, an official told Bloomberg.

While he is in South Korea, Carney will meet with President Lee Jae Myung to discuss opportunities for collaboration in critical minerals, energy, and defense. He will also attend a working dinner with Australia’s Anthony Albanese and New Zealand’s Christopher Luxon.

There are also plans for Carney to visit the Hanwha Ocean submarine manufacturing facility. Canada is considering awarding a multi-billion-dollar contract to the Korean company while also exploring a bid by Thyssenkrupp Marine Systems backed by Germany and Norway. Defense ministers from those two nations traveled to Ottawa recently to make their case to Carney and Canadian officials. A nation just south of Canada also manufacturers submarines, but for some reason, Canada is not looking to source its new boats from that country.

China Retaliates On Tariffs

To counter the Canadian 100 percent tariff on Chinese made cars and additional tariffs on steel and aluminum form China, the government of Xi Jinping has imposed punitive tariffs on Canadian canola, seafood, and pork.

Carney has pushed to improve relations with Beijing. Canada’s foreign minister visited the Chinese capital to meet with her counterpart earlier this month. But Carney faces a challenge in trying to improve relations with China while delicate trade talks with the US are ongoing. The US is Canada’s largest trading partner by far.

A Staunch Ally No More

Canada has been a staunch ally of the United States for over a hundred years. When the US was trying to exit Vietnam, Canadian troops helped stabilize that country until after US troops were withdrawn safely. When the US decided to invade Kuwait or Iraq, Canadian forces stood shoulder to shoulder with their US counterparts.

All that changed when the Fat Felon installed himself and his coterie of sycophants in the White House last January. The Moron of Mar-A-Loco immediately started shooting his mouth off about Canada becoming the 51st US state — by force if necessary. Since then, Canadians have learned the US is not to be trusted. Carney and his administration were shocked to find that the US was now a sworn adversary and all those decades of friendly relations were just a distant memory.

Carney has focused on finding new trading and political partners for Canada. This latest rumor, first reported by Chinese news source The Wire China, will be a severe blow to whatever friendly relations remain between the US and Canada, if true.

Canada & US Cross-Border Cooperation

For generations, GM, Ford, and Chrysler have operated factories in Canada, primarily in and around Windsor, Ontario, which is just across the Detroit River from Detroit. In practice, many components that go into the vehicles sold by those companies in the US are imported from Canada. Engines and transmissions in particular are often manufactured in Canada for the Big Three.

In fact, thanks to the free trade agreements between the two countries, the body of a new car may be stamped out in Detroit, then sent to Canada for the engine and transmission to be installed, then sent back to the US for the seats and interior to be added, then shipped back to Canada for other components to be included, before returning to the US one last time before the finished car is shipped to a dealer.

David Booth, writing for Canadian online blog Driving, has some thoughts on the rumors about Canada reducing tariffs on Chinese made cars. He urges Carney and company not to eliminate the 100 percent tariff entirely, as doing so could devastate what is left of the Canadian auto manufacturing industry.

The EU Model

Instead, he suggested that Canada should follow the path chosen by the European Union, which imposes tariffs based on how much of a subsidy each manufacturer has received from the Chinese government, according to the EU. He thinks the Canadian International Trade Tribunal could handle that task expertly and expeditiously. At the present time, BYD is subject to a 17 percent tariff in the EU, while SAIC — which refused to cooperate with the European Commission — pays that top rate of 35.3 percent.

The Canadian tariffs should be “high enough that Chinese-sourced cars would not run roughshod over our own local industry — the Detroit Three as well as Honda and Toyota — yet be sufficiently competitive that it would put a scare into the [so-called US president],” Booth said.

How Will US Customers React?

Just imagine what the reaction will be when US new car buyers learn that Canadians can purchase competitive electric cars from BYD, XPENG, NIO, and others for less money than they are paying for the highly polluting vehicles Detroit is offering! There is always the possibility that one or more of those Chinese companies may decide to build factories in Canada — literally within sight of the US border.

The pudgy potentate will learn soon enough that he may have signed a death warrant for the US automotive industry with all his bombast and bluster, and all because he surrounds himself with know-nothing ideologues who have no actual experience running businesses in the real world. He thinks all it takes to govern is to run around shouting “You’re fired!” at the top of his lungs. There’s actually quite a bit more to it than that, as he will learn one day soon to his sorrow.