Ottawa announces consultation on Chinese-made EVs this summer

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OTTAWA — The federal government will be launching a short consultation this summer to determine if Canada should follow other countries in adopting punitive tariffs on Chinese-made electric-vehicle imports.

Finance Minister Chrystia Freeland made the announcement in Vaughan, Ont., surrounded by representatives of Canada’s auto industry after days of speculation whether the country would follow the lead of the United States and the European Union in imposing tariffs.

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“On July 2, we will launch a 30-day consultation on potential policy responses to protect Canada’s auto workers, our growing EV industry, and to prevent trade diversion,” she said.

Freeland said the potential policy actions could include a surtax on imports of Chinese EVs under Section 53 of the Customs Tariff Act, excluding certain EVs from eligibility for federal subsidies, and “potentially broader investment restrictions in Canada.”

The consultations will seek comments on cyber and data security related to protecting Canadians’ privacy and Canada’s national interests. The government will also seek perspectives on China’s labour and environmental standards.

China has emerged as the largest manufacturer and exporter of EVs in the world in recent years, with annual EV exports totaling $47.2 billion in 2023, and it is prompting industrialized nations to take measures to prevent Chinese EVs from flooding their markets.

U.S. President Joe Biden announced in May that the U.S. would hike tariffs on Chinese EVs from 25 per cent to 100 per cent this year. The European Commission recently announced it would impose tariffs of up to 38 per cent on Chinese-made EVs as of July 4.

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China however wants Europe to scrap its tariffs after both sides agreed to hold talks on the matter.

Freeland said that, in launching these consultations, Canada will be acting in concert with its closest allies to prevent it from becoming a “dumping ground for Chinese over-supply.”

While refusing to speculate on the outcome of the consultation, she pledged to work with industry, unions and all levels of government “to come to the right answer for Canada.”

“We’ve been clear that nothing is ruled out, and all possible tools are on the table,” she said. “That includes the use of Section 53. This is a very powerful tool in Canada’s toolbox. It grants very strong and very broad powers to the finance minister to act.”

“We certainly see the need to be very strong in our defence of Canada and the national economic interest.”

Ontario Premier Doug Ford, who made a plea last week to “immediately match or exceed U.S. tariffs on Chinese imports,” said on X he was glad to see the federal government listening to his calls and take “quick action” to protect jobs in the auto sector.

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“Thousands of good-paying Ontario jobs and more than $43 billion in investments in our electric vehicle sector are at stake,” wrote Ford.

Freeland said that China is threatening Canada’s EV sector’s ability to compete by flooding global markets under state-directed policies.

“Let me be very clear, we are living in a world right now where China is taking advantage of the global economic system, where China is quite intentionally creating overcapacity in a number of different sectors and is exporting that capacity to other countries,” she said.

“That overcapacity is created with very problematic labour standards, very problematic environmental standards. And we shouldn’t forget there’s a national security aspect, especially to high-tech exports. So, we know we need to defend our national interest.”

Industry and union partners who were at the announcement seemed unbothered by the timing of the consultation, which happens to be in the middle of the summer.

Unifor president Lana Payne said she welcomed the launch of this consultation “into unfair Chinese EV imports” as “welcome and necessary news.”

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“Cheap comes at a very high cost, including a cost to our own jobs and communities. And this, I will tell you, our union will not stand for it. Waiting until it’s too late, when the damage is done and irreversible, is not an option,” she said.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, said all different partners would come together to come to a “thoughtful response” and boasted about Canada fighting alongside “the biggest powers in the world” for its auto industry.

Conservative critic for international trade Kyle Seeback did not comment on the substance on the announcement but said Canada “should not allow the dumping of cheap Chinese products into our country that threaten Canadian manufacturing jobs.”

NDP critic for industry Brian Masse said last week that his party would support calls for tariffs on Chinese-made EVs, adding that “Canadian workers must be at the forefront of our electric vehicle strategy.”

National Post
calevesque@postmedia.com

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