Canada proposes 100% tariffs on Tesla, I have an alternative: open the door to Chinese EVs

A Canadian candidate for Prime Minister has proposed implementing a 100% tariff on Tesla vehicles in response to US tariffs on Canadian goods.

I propose an alternative: open the door to Chinese EVs in Canada.

US President Donald Trump has confirmed a 25% tariff on all Canadian goods, except energy, which is tariffed at 10%, and 25% on all goods coming from Mexico.

Canada has already retaliated with similar tariffs on US goods, including electric vehicles – most EVs in Canada come from the US.

Chrystia Freeland was recently Deputy Prime Minister of Canada before quitting to run as a potential replacement for Justin Trudeau as the leader of the Liberal Party.

She has proposed that Canada implement 100% tariffs specifically on Tesla vehicles on top of the broader retaliatory tariffs. The politician’s logic is to target “stakeholders who matter to the White House”:

“We are going to go after American stakeholders who matter to the White House. I have proposed a 100 percent tariff on all Teslas. I am calling on all the countries that are affected by this tariff to join us, and our retaliation will target specific Trump constituencies.”

The proposal has garnered mixed reactions. Some believe that it is unfair to target Tesla directly. In contrast, others think it is fair game as Elon Musk is seen as having facilitated the election of Trump, who is going back on a free trade agreement with Canada that he signed just a few years ago.

Another solution: open the doors to Chinese EVs

Last year, Canada implemented 100% tariffs on electric vehicles coming from China. The move followed the US, and it was almost entirely to protect American automakers from the competitive Chinese EVs.

Canada has minimal domestic EV production, and American automakers established the little it has with massive Canadian government incentives.

Much of that is expected to go away as most of those EVs were to be exported to the US, which now imposes a 25% tariff on them.

I suggest Canada removes or greatly reduces the 100% tariff on Chinese EVs, which would allow Chinese automakers to establish a presence in Canada.

It will enable the country to continue its transition to zero-emission transport with more EVs available while sending a clear message to American automakers, who should, in turn, pressure the Trump administration to respect free trade agreements with allies.

To be fair, Tesla could then avoid the tariffs on US-made vehicles with its production from China, but I doubt it would change much. Tesla has already suffered incredible brand damage in Canada, and on top of it, it would be competing with other Chinese EVs, which are already putting a lot of pressure on the company in China.

Electrek’s Take

At Electrek, we are biased toward electric vehicles. We want the transition to accelerate, and if the US wants to hand over EV leadership to China, which appears to be the case, so be it.

In the short term, it would enable companies like Tesla, Volvo, and Polestar, who have Chinese production and are already established in Canada, to continue supplying EVs at a lower price to keep the transition going as it is expected to slow down greatly with reduced EV incentives and now 25% tariffs on US EVs.

And in the mid to long term, it would enable Chinese manufacturers, like BYD, Nio, Xpend, Li Auto, Xiaomi, etc., to invest in a presence in Canada, as they have in Europe.

If Canada is still concerned about this benefiting Tesla, I would point them to Tesla’s sales in Europe, which are crashing.