Canadian businesses struggling to cope with the recently imposed tariffs on Chinese electric vehicles (EVs), steel, and aluminum products can now request temporary tariff relief, according to a new announcement from Canada’s finance ministry. The relief is intended to give firms the flexibility to adjust their supply chains to meet the demands of the new trade restrictions. The tariffs, which were announced in late August, include a 100% surtax on Chinese-made EVs that took effect on October 1, and a 25% surtax on steel and aluminum products set to begin on October 22.
The ministry’s statement clarified that this remission would be granted under specific and exceptional circumstances, particularly for businesses that are facing significant challenges sourcing alternatives for these goods. The Canadian government emphasized that the measure is temporary and will only be provided on a case-by-case basis, allowing industries time to secure alternative supply chains. The relief will not apply to goods that are intended for resale in the same condition to the United States, a crucial stipulation to prevent companies from exploiting the remission for profit.
Canadian businesses may qualify for relief if they can demonstrate that the goods they need, or their substitutes, cannot be sourced domestically or from non-Chinese suppliers at reasonable costs. Additionally, companies locked into contracts made before August 26, 2024, that require them to purchase Chinese inputs for their products or projects, may also be eligible for temporary tariff remission. The government is considering other exceptional circumstances that could justify relief, especially if failure to grant remission would severely impact the Canadian economy.
The tariffs were introduced as part of Canada’s response to what it called China’s state-directed overcapacity in these sectors, particularly in the electric vehicle, steel, and aluminum industries. By imposing these tariffs, Canada aims to protect its own industries from being undercut by Chinese imports. The tariffs align with broader international concerns over China’s economic practices, which many countries argue distort global markets and harm domestic industries by flooding them with cheaper products.
The finance ministry has indicated that the duration of the remission period will be evaluated based on the needs of the affected industries. However, the federal government intends for this relief to be transitional, encouraging companies to move away from Chinese suppliers and develop alternative sourcing strategies. As businesses across Canada grapple with these new trade challenges, the remission offers a potential lifeline for those struggling to adapt while maintaining their operations.