Canada on Monday introduced weighty tariffs on steel, aluminum and electric vehicle (EV) imports from China in a move the government said will protect the mining sector and domestic jobs from Chinese competition.
The new tariffs include a 100% surtax on Chinese-made EVs and a 25% surtax on Chinese steel and aluminum imports, Deputy Prime Minister and Finance Minister Chrystia Freeland announced Monday in Halifax. These actions will boost the value of Canadian-mined metals and critical minerals, which are key to EVs and renewable energy technologies while supporting over 255,000 jobs in Canada’s automaking, steel and aluminum sectors, she said.
“Canada is home to the talented workers, raw materials, clean electricity, and specialized production capabilities needed to build electric vehicles, and that is why our EV supply chain potential is ranked first in the world,” Freeland said in a statement.
The tariffs show how Canada directly supports its upstream mining sector, which supplies essential steel, aluminum and EV production materials, the minister said. The measures will curb cheaper, subsidized Chinese metals, boosting demand and prices for Canadian-mined resources. They also align with Canada’s broader effort to secure a domestic supply chain for critical minerals.
The government argues these sectors face a Chinese state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets. Figures supplied by the Canadian government show that China’s yearly EV exports totalled $47.2 billion in 2023, up from $200 million in 2018.
Beyond tariffs, the government has started a 30-day consultation to secure a domestic supply of critical minerals like lithium, cobalt, and nickel, essential for EV production. This effort, which includes exploring actions in batteries, semiconductors and solar products, aims to boost investment in mining and solidify Canada’s role in the green economy. Ottawa plans a review in a year to assess competitiveness.
Chinese overcapacity
Despite softening global demand, China has added 18.6 million tonnes to its steelmaking capacity since 2018 to produce over 1 billion tonnes last year as the world’s largest steelmaker. Similarly, China’s primary aluminum capacity has surged from 11% to 59% of global production over the past two decades.
Beijing invested around US$70 billion between 2013 and 2017, according to the Organisation for Economic Co-operation and Development.
The surtax on Chinese-made EVs starts Oct. 1 and includes passenger vehicles, trucks, buses and delivery vans. Added to the existing 6.1% Most-Favoured Nation import tariff, the combined measure is expected to increase demand for North American-produced EVs, which rely on Canadian-sourced critical minerals like lithium, cobalt, nickel and graphite.
On Oct. 15, the surtax on Chinese steel and aluminum products will take effect. It’s expected to reduce competition from low-cost Chinese imports while stabilizing and potentially increasing prices for these metals.
Union support
Unifor and the United Steelworkers (USW) unions strongly support the new tariffs, citing their potential to protect Canadian jobs and stimulate the mining sector.
“We are pleased to see the federal government taking a more assertive role to support high-quality jobs here in Canada and create more balanced trade,” USW national director Marty Warren said in a statement.
Warren stressed the need to support domestic steel and aluminum sectors, which have faced pressure from Chinese imports.
An early August spark*insights poll, commissioned by Canada’s steel and aluminum industry associations, found that 79% of Canadians support imposing tariffs on Chinese steel, aluminum and EVs to protect domestic jobs.
“There is no justification to trade away high-paying, high-skilled jobs for cheap, high-carbon-intensive vehicles built under deplorable working conditions,” Unifor national president Lana Payne said in a statement. “The new tariffs will protect our workers and drive demand for Canadian-mined materials, supporting the growth of our mining sector.”
Huge mistake. Critical metal commodity prices are below cost of production. Canada’s domestic supply chain is hampered by inability to leverage mining permits. Worse yet, tariffs are another tax, ironically higher on state of the art Chinese EV technology than on carbon. Fully backwards move.