(Ottawa) The Canadian Chamber of Commerce (CCC) is urging the Trudeau government to follow the Biden administration’s lead in imposing tariffs on electric vehicles made in China.
Finance Minister Chrystia Freeland completed a series of consultations on this subject with the country’s major automotive industry players on Thursday. A cabinet decision could be made shortly on this matter, according to our information.
Everything indicates that this decision will be announced a few weeks after the official visit to China by Foreign Affairs Minister Mélanie Joly last July, the first since she took over the reins of Canadian diplomacy in November 2021. This visit aimed to reestablish channels of communication between the two capitals. But the imposition of customs tariffs by Canada risks raising new tensions with the communist regime in Beijing.
Especially since the Chinese company BYD, which builds electric vehicles, has just undertaken official steps to enter the Canadian market, the daily reported. The Globe and Mail this week.
In May, U.S. President Joe Biden announced that U.S. tariffs on imports of Chinese-made electric vehicles will be quadrupled, from 25% to 100%.
The tariff arsenal was used for several reasons: to prevent Chinese vehicles sold at low prices (around US$13,000) from flooding the American market; to protect the American auto industry as it begins its shift to a greater supply of electric vehicles; and to protect national security given that electric vehicles are data-collection machines.
Vigilance necessary
In the days following this decision by President Biden, the Trudeau government, which has provided billions of dollars in subsidies, in concert with the provinces of Ontario and Quebec, to attract battery and electric vehicle manufacturing plants, had opened the door to the use of the same arsenal for the same reasons.
According to the CCC, there is no doubt that Ottawa must follow Washington’s lead. The same vigilance is required on both sides of the border, especially since the automobile industry is highly integrated between the two countries.
“Canada’s electric vehicle sector is growing, but it risks being weakened by the arrival of Chinese electric vehicles in our market,” said Matthew Holmes, CCC’s Senior Vice-President of Policy and Government Relations.
We have seen China repeatedly and systematically undermine global supply chains and markets through unfair practices. And the risks of cybersecurity vulnerabilities in electric vehicles must be better understood and addressed by the government with close engagement of industry partners.
Matthew Holmes, CCC Senior Vice President, Policy and Government Relations
The CCC also recalled that on the eve of the revision of the Canada-United States-Mexico Agreement (CUSMA), scheduled for next year, the Trudeau government has every interest in demonstrating that Canada is ready to stand together to protect the automotive sector which is so integrated in North America.
Not unanimous
At Minister Chrystia Freeland’s office, Deputy Director of Communications Katherine Cuplinskas said in an email to The Press that “all options are on the table.” But the tone of his statement leaves little doubt about Ottawa’s intentions.
“The Government of Canada strongly believes that action is needed to level the playing field for Canadian auto workers and to ensure that the Canadian electric vehicle industry is competitive in domestic, North American and global markets,” she wrote in the email.
“All options – including a surtax – are on the table to protect Canadian workers and Canadian electric vehicle supply chains from unfair competition from China, which is pursuing an intentional policy of state-led overcapacity and failing to uphold strong labour and environmental standards,” she added.
However, such a protectionist measure is not unanimous. Because some believe that the imposition of customs tariffs could have the effect of keeping the prices of electric vehicles too high for consumers.
According to Statistics Canada, zero-emission vehicles accounted for just over 10% of all new motor vehicle registrations in 2023. Ottawa wants to accelerate the transition to the electrification of transportation. Starting in 2035, every new vehicle sold in the country will have to be electric or hydrogen-powered.