Canada Imposes New Surtaxes on China-Origin Goods, Impacting Electric Vehicles and Metals

The Government of Canada announced they are imposing significant surtaxes on specific goods originating from China, citing unfair trade practices and competition. The announcement alleges Chinese producers benefit from unfair, non-market policies and practices. Moreover, they claim China's intentional, state-directed policy of overcapacity and lack of rigorous labor and environmental standards threaten Canadian workers and businesses in the electric vehicle (EV) industry. These surtaxes aim to protect Canada's long term economic prosperity.

With these measures, international shippers and businesses involved in global trade must prepare for significant changes. Here's a detailed look at what's happening and how it could impact your shipping and trade strategies.

Canada targets electric vehicles and metal products with new tariffs

Electric vehicles: 100% surtax on Chinese-origin EVs

Effective October 1, 2024, the Government of Canada has imposed a 100% surtax on all Chinese-made EVs. This surtax applies to a wide range of vehicles, including electric passenger cars, hybrid vehicles, trucks, buses, and delivery vans.

The EV industry is one of the fastest-growing sectors in global trade, and this move by Canada could have far-reaching effects on the supply chain. Shippers moving electric vehicles between China and Canada may need to navigate higher costs, longer delivery times, and potential trade diversions because of the surtax.

Visit the Canadian Government's website for a complete list of vehicles affected by the surtax.

Steel and aluminum: 25% surtax on Chinese imports

In addition to EV surtaxes, the government also intends to apply a 25% surtax on imports of most steel and certain aluminum products from China starting on October 15, 2024. These metals are critical in industries like construction, manufacturing, and infrastructure. The surtax intends to shield Canadian workers from China's alleged unfair trade policies and to prevent the diversion of trade from other countries with similar tariffs.

The final list of goods subject to the steel and aluminum surtaxes is also available on the Canadian Government's website.

China's response: Canola anti-dumping investigation

On September 3, 2024, China responded to the surtax announcements from the Canadian Department of Finance with its own trade action. The Chinese Government announced its intention to launch an anti-dumping investigation into Canadian exports of canola products. This measure could have significant consequences for Canadian agricultural exporters and global food supply chains, further escalating trade tensions between the two countries.

Global shippers dealing in agricultural goods, particularly canola, should monitor the situation closely as trade barriers could expand beyond vehicles and metals.

Important considerations for global shippers

In-transit exemptions

One crucial detail for global shippers is that the surtaxes will not apply to Chinese goods that are already in transit to Canada before the surtax implementation dates. This means that electric vehicles on their way to Canada before October 1, 2024, and steel or aluminum products in transit before October 15, 2024, will not face these additional costs.

Reevaluate supply chains

Given the potential for increased costs and delays, it may be time to reassess your Canadian supply chains, particularly if they heavily rely on Chinese goods. Exploring alternative suppliers or shipping routes could help mitigate the impact of these surtaxes.

Monitor further developments

The evolving trade landscape between Canada and China could lead to additional measures or countermeasures in the future. Stay updated on the latest announcements from both governments to ensure compliance and minimize disruptions.

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