Tesla asked Canada to reduce tariffs on its EVs made in China, Reuters source says

Before Canada said this week it was imposing a 100 per cent duty on Chinese-made electric vehicles, Tesla approached Ottawa and asked for a lower tariff on its autos, a Canadian government source told Reuters on Wednesday.

Canada, following the lead of the United States, said on Monday it was setting the tariff for all Chinese-made vehicles sold in the country because of what it called China's intentional state-directed policy of overcapacity.

The duties — effective Oct. 1 — apply to all EVs shipped from China, including those made by Tesla. In June, Ottawa had flagged its intention to impose duties.

The source, who requested anonymity given the sensitivity of the situation, said Tesla approached Canada before the official announcement. The automaker asked for a rate similar to what it received in the European Union, the source said.

Tesla does not disclose its Chinese exports to Canada. However, vehicle-identification codes showed that the Model 3 compact sedan and Model Y crossover models were being exported from Shanghai to Canada.

The EU softened its stance on Tesla this month when it imposed a nine per cent tariff on cars the company made in China, compared to a 36.3 per cent rate it slapped on other Chinese EV imports.

While the EU only considered direct subsidy costs when calculating its tariff for Tesla, the United States and Canada looked at subsidies, industrial over-capacity, non-market policies as well as environmental and labour standards, the source said.

Tesla has not contacted Ottawa since Monday, the source said.

Tesla was not immediately available for comment to Reuters.

The office of Finance Minister Chrystia Freeland, who has overall responsibility for tariffs, declined comment to Reuters on talks with Tesla.

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