The Canadian government appears poised to counter an explosion in electric vehicle imports from China by joining its allies in a tariff war that risks provoking retaliation from Beijing.
Ontario Premier Doug Ford on Thursday called on the federal government to “immediately impose tariffs equal to or greater than U.S. tariffs on imports from China, including a tariff of at least 100 per cent on Chinese-made electric vehicles.”
“China is taking full advantage of its low labour standards and dirty energy to flood the market with artificially cheap electric vehicles. If we do not act quickly, Ontario and Canadian jobs are at risk,” the premier said in a media statement.
A few hours later, Prime Minister Justin Trudeau appeared to agree.
“Doug Ford and I, the Ontario government and the Canadian government have worked closely over the last few years to build here in Canada one of the strongest electric vehicle ecosystems in the world,” the premier told reporters in Nova Scotia.
“We are closely monitoring actions by the United States and our other allies, and will carefully consider what steps we need to take to ensure that Canada’s auto industry and Canadian consumers are adequately supported in the coming years.”
So does that mean we’re approaching a decision by Canada to impose tariffs and align itself with its largest ally and trading partner?
CBC News reached out to Trade Minister Mary Ng’s office, who said Finance Minister Chrystia Freeland is leading the effort, and that she discussed the issue at a dinner with US Treasury Secretary Janet Yellen on Monday night.
“China has a deliberate, state-sponsored policy of excess capacity,” Catherine Kaplinskas, a spokeswoman for Foreign Minister Freeland, said in an email. “We are actively evaluating next steps to counter China’s overcapacity. It is essential that we protect Canadian jobs, manufacturing, and free trade relationships.”
With the number of electric vehicles manufactured in China skyrocketing, Ontario Premier Doug Ford is calling on the Canadian government to impose tariffs on these vehicles that rival the tough U.S. tariffs. Ontario Economic Development Minister Vic Fedeli appeared on Power & Politics to discuss why the province is concerned about these vehicles and whether he’s worried China could retaliate if Canada takes action.
Imported data poses a growing threat
Speaking in Italy last week, Trudeau said he had “important discussions” with other G7 leaders about what trade diplomats are calling “China’s glut”.
Canada is the only G7 country that has preferential trade agreements with all other partners, which could allow Beijing to use Canadian ports and dealers as a back door to U.S. consumer markets.
Federal Minister of Innovation, Science and Industry François-Philippe Champagne told Power & Politics that Canada and the U.S. are very much aligned when it comes to “protecting key supply chains” and North American jobs. U.S. President Joe Biden announced earlier this week that he would increase tariffs on imports from China, including electric vehicles.
Statistics Canada data for the first four months of 2024 shows the Canadian dollar value of electric vehicle imports from China is up more than 1,200% year-over-year, 13 times what it was last year. The trend is likely to continue, with trade volumes set to surge further later this year as next year’s models are released. North American automakers have been sounding the alarm about the data for months.
In Canada, much of this import volume comes from Tesla’s Gigafactory in Shanghai.
Other Chinese brands are also becoming increasingly common on European roads, prompting the European Commission to decide earlier this month to impose an anti-subsidy tax of 38.1 percent from July.
In an opinion piece published in the Financial Post this week, Flavio Volpe, president of the Association of Automotive Parts Manufacturers, urged consumers to ask themselves why Chinese EVs are so cheap.
Volpe pointed to a rare strike at a Chinese automaker this year that revealed its workers working 12 hours a day, six days a week, but earning less in a year than workers at a Canadian car factory make in a month.
He also reiterated his view that Canada’s policies are inconsistent.
To meet its climate change goals, the Canadian government is using taxpayer money to fund a variety of consumer incentives for EV purchases, and the federal government is mandating that all new cars sold in Canada must be electric by 2035.
China’s state-run economy has been gearing up for the electrification of its vehicles for years, giving it an edge in making batteries for electric vehicles and making them ready to export in response to Canada’s move to remove gasoline-powered cars from its roads.
But if low-emissions Chinese brands establish too strong a position in North America, it could undermine the billions of dollars in taxpayer-funded investment tax credits and production subsidies that federal and provincial governments have pumped into bids for new manufacturing plants in Canada.
Risk of retaliation
If Canada joins the tariff war, it is inconceivable that Beijing will not fight back.
China’s Ministry of Commerce said on Monday that an anti-dumping investigation into pork products imported from the European Union has been launched following a complaint filed on June 6 by the China Animal Husbandry Association.
While the complaint was dated before the European Commission announced the 38.1% EV tariffs on June 12, the June 17 announcement led to suggestions that this may have actually been a thinly veiled retaliatory measure aimed at sowing fear in Europe’s politically powerful agriculture sector.
While the investigation continues, EU pork exports can continue tariff-free, but the threat to key suppliers Spain, the Netherlands and Denmark is clear and raised immediate concerns about the risk of losing access to the Chinese market.
China has not directly retaliated against the German auto industry, which has voiced opposition to China’s measures against EVs.
“Isolation and illegal tariff barriers only end up making everything more expensive and everyone poorer,” German Chancellor Olaf Scholz warned in a recent statement. “We will not close our markets to foreign companies, because we don’t want that for our companies either.”
Beijing likes to use what trade experts call “commodity diplomacy” to intimidate smaller nations when it feels its national interests are threatened.
Canadian livestock and canola farmers have felt China’s wrath in the past, and going along with the Biden administration’s EV tariffs could once again spark accusations from China’s foreign ministry that Canada is not looking out for its own national interests. Comply with US requirements.
National security threat?
The Biden administration’s decision to erect new tariff walls around domestic industries may also be motivated by national security concerns.
Under the Trump administration, national security was cited as a justification for the imposition of steel tariffs, with reliance on imports for such a critical manufacturing input being seen as an unacceptable threat, particularly for the defense industry.
Members of the Five Eyes intelligence alliance — Canada, Australia, New Zealand, the United Kingdom and the United States — are also monitoring China’s industrial strategy for espionage threats.
US authorities recently conspired with a Chinese businessman to Steal trade secrets Establish a rival EV battery company in China.
Consumers and privacy watchdogs have grown increasingly concerned about artificial intelligence features in the latest electric vehicle models. Tesla employees, for example, were found last year to have shared invasive images from the brand’s built-in cameras that owners and drivers were not supposed to know about. Collected and retained.
In the aftermath of the controversy, Tesla clarified its privacy policy to reassure customers. In Canada, Owners must opt-in to sharing their personal dataThe company says it will never sell or rent its vehicle data to third parties.
The Biden administration has imposed 100% tariffs on Chinese-made electric vehicles and a series of tariffs on other products, which are expected to worsen relations between the two countries and could have ripple effects on Canada.
Canada’s privacy commissioner raised concerns about connected cars as early as 2017, but in a globally connected world, some of the national security concerns the technology raises may fall outside the agency’s purview.
For example, if dashcam video clips and still images are stored on servers in China, they could be accessible to Chinese Communist Party officials and would not be subject to the privacy protections enjoyed by North American citizens.
This, along with other concerns, Data storage for the Chinese parent company of social media app TikTokCompanies based in China cannot refuse government requests for company data.
