Is Canada also planning to impose tariffs on Chinese photovoltaic products? [SMM Analysis]

On September 10, the Canadian government began seeking opinions on imposing additional taxes on photovoltaic products, cells and cell parts, semiconductors, and critical minerals from Chinese producers. The consultation period lasts 30 days, with results expected on October 10. In an online statement, the Canadian government stated that Canadian workers and related critical manufacturing supply chains are currently facing unfair competition from Chinese producers, who benefit from China's intentional, state-led capacity surplus policies and lack of stringent labor and environmental standards. The report states that additional taxes could protect Canadian workers, safeguard national investments in critical sectors, prevent trade diversion, ensure stable and affordable supplies of critical manufacturing products, and support Canada's transition to net-zero emissions by 2050. Prior to this consultation, the Canadian government had formulated policy responses to China's trade practices in the electric vehicles sector, with stakeholders expressing support for imposing additional taxes on electric vehicles. Therefore, the Canadian government announced that starting October 1, a 100% additional tax will be imposed on electric vehicles made in China, and starting October 15, a 25% additional tax will be imposed on steel and aluminum products imported from China. Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland stated, "Our economy needs fair competition in global markets to thrive and ensure the prosperity of Canadian workers." "If left unchecked, China's intentional, state-led capacity surplus policies and other non-market practices could lead to a surge in imported products, which are produced with weak labor and environmental standards." The Canadian government has developed a net-zero economy plan, investing over 160 billion dollars, including a series of unprecedented major economic investment tax credits. Photovoltaic system deployment is a crucial part of achieving net-zero emissions by 2050. Canada has 500,000 commercial and industrial rooftops and over 15 million residential rooftops suitable for rooftop photovoltaic system installation. Additionally, in some provinces and regions, sunlight hours can rival those in sunny places like Australia, further proving that photovoltaics are indeed a viable energy solution for Canada. However, Canada's pace in deploying photovoltaic systems has been somewhat slow. In 2023, Canada added 446 MW of new photovoltaic installations. The country's total renewable energy capacity increased by 2.3 GW, exceeding 21.9 GW by the end of 2023. Utility-scale wind power holds the largest share at 16.98 GW, followed by photovoltaics at 4.6 GW, with 1.2 GW of ground solar and 356 MW/539 MWh of energy storage. According to the "2050 Vision," Canada needs to deploy over 5 GW of wind and photovoltaic energy annually to achieve net-zero emissions. To reach 47 GW of photovoltaic capacity by 2050, at least 1.6 GW of new photovoltaics must be added annually, requiring approximately 8 billion Canadian dollars (6.3 billion USD) in investment. As a smaller photovoltaic sub-market, Canada's domestic module capacity is also small, with little presence. The current Canadian module capacity is 1 GW, with slow expansion progress. To achieve the annual new photovoltaic installation target, Canada will find it difficult to avoid relying on imported modules. Given that Canada is not a major export destination for Chinese photovoltaic module companies, the additional tax has a minimal surface impact, but such trade barrier in protection of local manufacturing could pose a potential threat to the export of Chinese photovoltaic products.