Feds refuse to implement tariffs on Chinese electric vehicles

“Canadian auto workers and the entire auto sector are facing unfair competition from China’s intentional, state-directed policy of overcapacity," said Deputy Prime Minister Freeland, claiming that this undermines domestic and global markets.

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  • June 26, 2024
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Feds refuse to implement tariffs on Chinese electric vehicles
The Canadian Press / Adrian Wyld
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The Trudeau government has refused tariffs on Chinese electric vehicle (EV) imports, according to media reports.

On Monday, Cabinet said it would review, over the next 30 days, the impacts of Chinese EVs on the domestic industry.

“The people you see standing here together are the people who are going to be part of that Team Canada approach to these consultations,” Deputy Prime Minister Chrystia Freeland told a group of auto workers and executives.

Meanwhile, the United States and Europe have trade controls in place for the sector.    

“Canadian auto workers and the auto sector are facing unfair competition from China’s intentional, state-directed policy of overcapacity that is undermining Canada’s EV sector’s ability to compete in domestic and global markets," said Freeland.

The only Chinese EVs currently sold in Canada are produced by Tesla Inc., which reported a 9% drop in earnings due to sagging demand for the transportation mode.

EV purchases plateaued in the third quarter of 2023, according to Statistics Canada. At the time, they represented 26.2% of new vehicle registrations, a number that fell to 24.5% in the first quarter of this year.

Nevertheless, Minister Freeland told reporters that China “undermines EV producers around the world.”

They are engaging in an “intentional, state-directed policy” of flooding the market with inexpensive EVs, she claimed.

“We are living in a world right now where China is taking advantage of the global economic system,” Freeland said. “We know we need to defend our national interest and we will.” 

In retaliation, Canada promised “clear, strong, decisive action” to counter their “unfair competition.”

Though tariffs are not on the table yet, the minister of finance did not rule it out upon completing the review.

The government’s list of potential policy options includes imposing a surcharge on Chinese EVs, excluding them from the $5,000 rebates and broader investment restrictions. 

“That includes the use of Section 53 [of Custom tariffs law] … It grants very strong and very broad powers to the finance minister to act,” said Freeland, which permits a surcharge on tariffs. 

Last week, Ontario Premier Doug Ford urged his federal counterparts to take decisive action and impose import tariffs without delay.

“I’m calling on the federal government to immediately match or exceed U.S. tariffs on Chinese imports, including at least a 100% tariff on Chinese electric vehicles,” wrote Ford on X, formerly Twitter.

The Biden administration announced tariffs on $18 billion in imported goods from China, which quadruple taxes on Chinese EVs.

China is also a major battery supplier for EVs, as well as battery components globally, accounting for 80% of all lithium-ion EV batteries worldwide in 2021. 

“Taking every advantage of low labour standards and dirty energy, China is flooding the market with artificially cheap electric vehicles. Unless we act fast, we risk Ontario and Canadian jobs,” said Ford.

Next month, the European Union will impose provisional tariffs between 17% and 38% on Chinese vehicles.

Conservative international trade critic Kyle Seeback also supported calls to penalize Chinese competition to protect local manufacturing jobs. 

“Our priority is to protect the jobs of Canadian workers. Canada should not allow the dumping of cheap Chinese products into our country that threaten Canadian manufacturing jobs,” said Seeback, who blamed rising manufacturing costs on the inflationary carbon tax.

The federal and provincial governments have allocated more than $52 billion in subsidies to ensure EVs are manufactured domestically, according to the Parliamentary Budget Office.  

“Trudeau has failed to protect Canadian auto workers,” he said, “as evidenced by the fact that he has spent tens of billions of dollars subsidizing jobs for foreign replacement workers at EV battery plants.”

He has secured “no guarantees” for Canadian workers, claimed Seeback.

“Common Sense Conservatives believe we should work with our close trading partners like the United States, so we can protect Canadian jobs and stand up for the working people of our country.”

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