The government is expected to soon announce the initiation of public consultations on tariffs that would impact Chinese exports of electric vehicles (EVs) into Canada, according to unidentified officials. This decision is still pending final government approval. Pressure has been mounting on Canadian Prime Minister Justin Trudeau to align with the United States’ approach of significantly increasing tariffs on Chinese-manufactured EVs. The European Union has also recently announced plans to raise tariffs on Chinese EVs, with some vehicles facing levies as high as 48%. Western democracies are growing increasingly concerned about China’s excessive production of key goods, viewing it as an attempt to dominate supply chains and undermine their own industries. As Chinese companies like BYD Co. aggressively expand into global markets, battery-electric vehicles have become a primary target.
Earlier on Thursday, Ontario Premier Doug Ford accused China of exploiting low labor standards and using dirty energy to produce cheap electric vehicles (EVs). He urged the Canadian government, led by Prime Minister Trudeau, to impose tariffs on Chinese EVs similar to those imposed by President Biden. Ford expressed concerns over the potential loss of jobs in Ontario and Canada if action is not taken swiftly. The number of cars imported from China to the port of Vancouver increased significantly last year, reaching approximately 44,400 vehicles. This surge in imports can be attributed to Tesla’s shipment of Model Y vehicles produced in Shanghai to Canada. However, the Canadian government’s apprehension lies not with Tesla but with the potential influx of low-cost vehicles from Chinese automakers that could flood the market.
Trudeau and his cabinet ministers have publicly stated that they are keeping a close eye on the actions of other countries, but have not committed to implementing new tariffs. During the Group of Seven leaders’ summit in Italy, the prime minister revealed that he had engaged in important discussions regarding Chinese production.
According to a spokesperson for Finance Minister Chrystia Freeland, Canada is actively considering its options to address the issue of Chinese oversupply. However, the spokesperson did not confirm whether tariffs are being prepared.
In an email, Katherine Cuplinskas, Freeland’s press secretary, highlighted that China has a deliberate, state-directed policy of overcapacity. She emphasized the need to protect Canadian jobs, manufacturing, and the country’s free trade relationships.
The Canadian auto industry associations have urged Canada to impose strong tariffs, emphasizing that it is crucial for Canada to align with the US on this matter, especially considering the imminent review of the United States-Mexico-Canada free trade agreement. The auto supply chains between the US and Canada are highly interdependent, with a substantial amount of parts and finished vehicles crossing the border. The majority of Canada’s automobile production is exported to the US.
Nevertheless, Prime Minister Trudeau has proceeded cautiously, taking into account the potential repercussions of trade retaliation from China. Some environmental organizations argue that the primary focus should be on maintaining low costs for electric vehicles (EVs) to encourage greater consumer adoption.
Both Trudeau’s administration and the Ontario government, led by Doug Ford, have pledged to invest billions of dollars in developing a domestic electric vehicle manufacturing industry. This includes activities ranging from mining critical minerals for batteries to the assembly of cars and light trucks.
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