In response to what Deputy Prime Minister Chrystia Freeland calls China's "state-directed policy of overcapacity," Canada is contemplating the implementation of import tariffs on Chinese-made electric vehicles. Freeland announced on Monday that Ottawa will seek public opinion on this matter through a 30-day consultation period, set to begin on July 2.

Freeland expressed concerns about the unfair competition faced by Canada's domestic car sector due to China's intentional generation of a global oversupply of electric vehicles. These concerns mirror those raised by the United States and the European Union. Freeland emphasized that public consultations will play a crucial role in determining Canada's policy response, which may include imposing tariffs on imports. This move aims to align Canada with Washington and Brussels in addressing the issue.

This announcement comes shortly after US President Joe Biden unveiled a series of steep tariff increases on various Chinese imports, including electric vehicles. Similarly, the European Commission is planning to impose additional duties of up to 38.1 percent on Chinese producers such as BYD, Geely, SAIC, and even Chinese-built Tesla and BMW cars.

China, however, has rejected allegations of unfair subsidies or overcapacity, attributing the development of its EV industry to technological advantages, market conditions, and industry supply chains.

An opinion piece published in the state-backed Global Times newspaper cautioned Canada against sacrificing normal economic exchanges with China for the sake of Washington's strategic interests. The piece warned that imposing tariffs on Chinese EVs may impact market confidence among Chinese investors, worsen bilateral relations, and hinder economic and trade cooperation.

Prime Minister Justin Trudeau's Liberal government, aiming to position Canada as a key player in the global EV supply chain, has been under pressure domestically to take action against Chinese EVs. Ontario's Premier, the most populous province and a major car manufacturing hub in Canada, recently called on Ottawa to impose tariffs of at least 100 percent on Chinese-made electric vehicles to protect local jobs.

While Freeland did not specify the potential actions Ottawa may take or whether EV components like batteries could also be targeted, she affirmed that all options are on the table and that Canada will employ its strongest trade action tools when necessary.

Canada has been actively securing deals worth billions of dollars to attract companies involved in all aspects of the EV supply chain to bolster its manufacturing heartland in Ontario.