On Monday, Canadian Deputy Prime Minister Chrystia Freeland announced the launch of policy consultations, beginning July 2, to prevent a surge of inexpensive Chinese electric vehicles from flowing into Canada.
Freeland, flanked by Canadian Trade Minister Mary Ng and automotive industry leaders at a press conference in Vaughan, Ont., said that no policy would be ruled out to “protect” Canadian workers from China’s “state-directed policy of overcapacity.”
In the first four months of 2024, Canada imported C$462 million worth of EVs from China, a nearly 1,300 per cent increase compared to the same period in 2023. Most EVs shipped from China to Canada are from Tesla’s factory in Shanghai.
Freeland stated Monday that Ottawa would consider a surtax on imports of EVs from China (already subject to a ‘standard’ tariff of 6.1 per cent), changes to which cars are eligible for federal incentives, and broader investment restrictions. She noted the 30-day consultations would also focus on cybersecurity and data protection.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, spoke at the event on Monday, acknowledging that he was “very happy” about the consultations. Last month, Volpe told the National Post that elements of Ottawa’s EV policy were “crazy,” criticizing the government’s rebate program in particular.
Last year, zero-emission vehicles accounted for 10.8 per cent of new motor-vehicle registrations in Canada.
A growing consensus?
As Ottawa merges with Washington and Brussels on EV policy, it will have to brace for retaliation, recriminations, or negotiations.
In May, U.S. President Joe Biden hiked tariffs on Chinese EVs from 25 per cent to 100 per cent to “protect” American manufacturers from “China’s unfair trade practices.” Beijing said Biden's broader suite of tariffs would “seriously affect” bilateral co-operation.
Meanwhile, the EU provisionally concluded earlier this month that it would impose higher tariffs on Chinese EVs — ranging from 17.4 per cent to 38.1 per cent, depending on the carmaker — although negotiations between the two sides began in earnest last Saturday. If talks fail, the tariffs are expected to kick in this November.
In an apparent act of retaliation, Beijing launched an anti-subsidy investigation into pork imports from EU member states and has threatened to dispute the EU’s planned EV tariffs at the World Trade Organization.
The road ahead
APF Canada’s Vice-President, Research & Strategy, Vina Nadjibulla, told Asia Watch that Ottawa will have three main considerations in crafting a policy response.
First, aligning with the U.S. and ensuring Canada is not used by China as a backdoor to the American market. Second, respecting rules-based trade. And third, factoring in possible retaliation by China. Nadjibulla noted that while calls for tariffs are loudest in Ontario, any retaliation by Beijing would likely hit farmers in Western Canada the hardest.
Canadian merchandise exports to China totalled C$30.5 billion in 2023, with farm, fishing, and intermediate food products making up around one-third of those exports.
