Canada, following the lead of the United States, said on Monday it was setting the tariff on all Chinese-made vehicles sold in the country because of what it called China’s intentional, state-directed policy of overcapacity.
The duties, effective from October 1, apply to all Electric vehicles shipped from China, including those made by Tesla. In June, Ottawa had announced its intention to impose tariffs.
The source, who asked not to be identified given the sensitivity of the situation, said Tesla had reached out to Canada before the official announcement. The automaker asked for a tariff similar to the one it received in the European Union, the source said.
Tesla does not disclose its Chinese exports to Canada. However, vehicle identification codes indicated that the Model 3 compact sedan and Model Y crossover were exported from Shanghai to Canada.
The EU softened its stance on Tesla this month when it imposed a 9% tariff on cars the company makes in China, compared with a 36.3% rate it applied to other Chinese electric vehicle imports. While the EU only considered the direct costs of subsidies when calculating its tariff on Tesla, the United States and Canada looked at subsidies, industrial overcapacity, nontrade policies as well as environmental and labor standards, the source said. Tesla has not communicated with Ottawa since Monday, the source said.
Tesla was not immediately available for comment.
The office of Canadian Finance Minister Chrystia Freeland, who has overall responsibility for tariffs, declined to address the talks with Tesla.
Canadian auto imports from China to its largest port, Vancouver, rose 460% year-over-year to 44,356 in 2023 as Tesla began shipping Shanghai-made electric vehicles to Canada.
US President Joe Biden announced in May a quadrupling of tariffs on Chinese electric vehicles to 100%, a doubling of tariffs on semiconductors and solar cells to 50%, as well as new 25% tariffs on lithium-ion batteries and other strategic goods. Tesla has never shipped Made in China models to the U.S. market, according to a letter the company sent in July 2023 to the U.S. Environmental Protection Agency.
The implementation of US tariffs has been delayed until September and there is a possibility that the planned tariffs will be eased this week.
Volvo Cars said it was studying the effects of the tariff hike in Canada. The Swedish automaker said it imported the EX30, XC60 and a limited number of S90 models from China to Canada, but did not disclose specific figures.
Swedish electric vehicle maker Polestar, partly owned by Volvo Cars and China’s Geely, is shipping the Polestar 2 from China to Canada. The company said it was looking into the impact of Canadian tariffs.
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