More bad news for Chinese electric car makers: Canada to impose huge tax on Chinese EVs such as the 2025 BYD Atto 3, MG4 and even some Tesla Model 3s

Canada has followed the lead of the US and European Union in announcing it will impose a big tariff on Chinese-made EVs.

According to the Canadian government, the 100 per cent tax will apply to all vehicles imported from China, including those built by Tesla, who currently ships its Chinese-made EVs to Canada.

President Biden announced a 100 per cent tariff on Chinese EVs earlier this year and the EU has set tariffs of up to 38 per cent on various Chinese EV makers.

Shares of Tesla, the world’s most valuable automaker, fell 3.2 per cent at the close of the US market yesterday.

The announcement comes as Chinese automaker BYD, the second largest manufacturer of EVs globally, prepares to enter the Canadian market.

Vehicle imports from China to Canada surged 460 per cent year over year to 44,356 in 2023, when Tesla began importing its Shanghai-made EVs into Canada, according to Reuters.

Canadian Prime Minister Justin Trudeau echoed the same sentiment expressed by US and EU leaders that the Chinese government backed makers were intentionally over-saturating western car markets with cheaper imports.

"I think we all know that China is not playing by the same rules," he said to reporters.

The tariffs will commence in Canada from October 1 this year.

Tesla is likely to begin importing its American-made vehicles into Canada, while automakers manufacturing in China will be forced to open factories outside of China or look for alternative markets to circumvent tariffs.

The Australian market will no doubt present as an appealing alternative, where a lack of a local car manufacturing industry ensures the Australian government is highly unlikely to impose any protective measures.

Sales of Chinese-made vehicles have skyrocketed in Australia in recent years, with China now ranking as the third most popular country for vehicle imports into Australia.

In the first seven months of this year, 109,305 Chinese-made vehicles were sold in Australia, accounting for roughly 15 per cent of total vehicle sales. More than 80 per cent of EVs sold in Australia are built in China.

That includes popular Chinese brands such as MG, GWM, BYD and LDV, but it also includes European and American manufacturers such as BMW, Volvo and Tesla, who also import Chinese-made cars into Australia.

The number of Chinese brands on sale in Australia is only projected to increase as new brands such as Changan, Foton, Leapmotor, Skywell, Smart, Xpeng and Zeekr prepare for local launches in the next 12 months.

The latest round of tariffs could have even more brands lining up to arrive in 2025.