Canada China Surtax Order (2024) – 100% on Chinese EVs and 25% on Chinese steel/aluminum

Mechanism

The Governor in Council acted under subsection 53(2) and paragraph 79(a) of the Customs Tariff — the same statutory hook that supports surtax orders without recourse to a CITT injury inquiry. The two-tranche structure (EVs first under SOR/2024-187, then steel/aluminum under the amending SOR/2024-202) followed the public consultation paper that the Department of Finance issued on 26 August 2024.

For EVs, the 100% surtax stacks on top of the existing 6.1% Most- Favoured-Nation tariff and applies regardless of whether the goods are shipped from China or transshipped via a third country. The schedule covers 23 tariff items across HS chapters 87.02 (buses), 87.03 (passenger cars including BEV/PHEV/hybrid lines under 8703.40–8703.90), and 87.04 (commercial vehicles 8704.41–8704.90). The EV surtax bites Tesla Shanghai-built Model 3/Y exports to Canada — the largest single commercial impact at the time, since Tesla had been the dominant China-to-Canada EV importer — and forecloses a Canadian market entry for BYD, SAIC, Geely-group brands (incl. Volvo/Polestar Chinese-built SKUs), Nio, XPeng, and Li Auto.

For steel and aluminum, the 25% surtax applies to the value for duty, in addition to MFN tariffs and any anti-dumping or countervailing duties already in place. CBSA enforces a country-of-melt-and-pour (steel) and country-of-smelt-and-cast (aluminum) certification regime; importers must produce documentation to claim non-China origin even when the goods are shipped from a third country.

Downstream implications

• First standalone Canadian trade-remedy action against China in the

IPTM register. Existing Canadian entries (Critical Minerals Strategy; Bill C-34 ICA modernisation) are positive industrial-policy or investment-screening; this is the defensive-tariff pillar.

• Aligns Canada with the trilateral western EV-tariff perimeter against

China: US Section 301 100% (effective 27 September 2024) → Canada 100% (1 October 2024) → EU definitive anti-subsidy duties up to 35.3% on top of the 10% MFN (29 October 2024). This narrows the routing options for Chinese OEMs seeking a North American beachhead via Canadian assembly or transshipment.

• Provides direct fiscal cover for Canadian / Quebec / Ontario battery

and EV-assembly subsidies (Stellantis-LGES NextStar Windsor; Volkswagen PowerCo St. Thomas; Honda Alliston; Northvolt Saint-Basile- le-Grand) — anchoring the IRA-aligned Canada-US battery corridor.

• Steel/aluminum surtax was partly rendered moot for a different reason

six months later: the US Section 232 reinstatement (12 March 2025) removed Canada's bilateral exemption, so Canadian downstream fabricators face their own US-tariff cost shock at the same time as they get nominal protection from cheap Chinese imports.

Open questions

• Will the surtax survive a WTO challenge if China brings one? Canada

bypassed the CITT injury route, which is unusual for a major trade- remedy action.

• How wide does the China Surtax Remission Order grow? SOR/2025-12 set

a precedent for case-by-case carve-outs; subsequent amending remission orders (e.g. SOR/2026-14) are tracked in the Canada Gazette and effectively soften the surtax for Canadian importers without political visibility.

• Whether a future Canadian government uses the same SOR/53(2) channel

to extend surtaxes into adjacent Chinese categories (solar modules, batteries, ship-to-shore cranes) the way the US Section 301 expansion did.