Canada announces plans for 25% tariff on electric vehicles coming from the US

Canada has confirmed that, as part of its effort to retaliate against the US over President Trump’s trade war against allies, it will impose a 25% tariff on electric vehicles from the US.

President Trump followed through with his threat to impose new 25% tariffs on all goods coming from Mexico and Canada, two countries with which he signed updated free trade agreements just a few years ago when he was president.

The reason Trump can impose those tariffs and break those free trade agreements is due to his use of “emergency power”, which he justifies because he claims Canada and Mexico are not doing enough to stop fentanyl from crossing the border into the US.

Facts do not support this.

Furthermore, when listening to Trump’s rhetoric around making Canada the “51st state” of the United States, it becomes clear that the real reason he is putting economic pressure on Canada is due to his wish to expand US territory as part of some ego-driven legacy-building agenda.

Regardless, we are now in the middle of a North American trade war started by the US president, and Canada has issued its response.

Canada will implement a 25% tariff on $30 billion in goods imported from the U.S. starting on Tuesday, February 4th.

The government is also working on a much more severe second wave of 25% tariffs on an additional list of imported U.S. goods worth $125 billion. This list is currently subject to public commentary for 21 days before being implemented, but it currently includes:

“Passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.”

Considering most electric vehicles in Canada come from the US, this is likely going to greatly slow down EV adoption in the country.

Furthermore, several EV incentives were recently phased out – further accelerating the decline in EV growth.

Electrek’s Take

This is going to be a nightmare for EV adoption in Canada. I think this is an opportunity to revisit the tariffs on Chinese electric vehicles.

Canada imposed a 100% tariff on Chinese electric vehicles, mostly to help protect the US EV industry. Now that the US has become hostile, it makes no sense to protect it. Let the Chinese EVs flow, which will help keep some momentum in EV adoption in Canada.

I know that many Canadians don’t want to help Tesla anymore because they see Elon Musk as controlling Trump, but Tesla is likely already looking to import EVs into Canada from Berlin to circumvent the tariffs.

I am sure that Tesla prefers this current situation over having to import EVs from China again and compete with Chinese automakers in the Canadian market.

I think everyone wins except for American automakers, who should put pressure on the Trump administration to end this senseless trade war.