Impose tariffs on Chinese electric vehicles, ex-U.S. envoy urges Canada

Click to play video: 'U.S. tariffs on Chinese EVs a ‘tightrope’ for Canada?'
U.S. tariffs on Chinese EVs a ‘tightrope’ for Canada?
The Biden administration has placed significant tariffs on Chinese-made electric vehicles. Canada has not ruled out similar measures, but will it prove to be a tightrope walk for Ottawa? – May 28, 2024

A former U.S. ambassador to Canada is urging Ottawa to join the U.S. and the EU in placing tariffs on Chinese electric vehicles amid concerns Beijing’s government subsidies are flooding the international market with cheaper cars.

On Wednesday, the EU threatened to impose tariffs up to 38 per cent on imported Chinese EVs starting on July 4. That increase comes in the wake of U.S. President Joe Biden quadrupling import tariffs on electric vehicles made in China to 100 per cent a month ago on May 14.

Bruce Heyman, who was the U.S. ambassador to Canada from 2014 to 2017 under former president Barack Obama, said Canada should follow the U.S. because the two countries are strong trading partners.

“I think what’s important is that Canada and the U.S. become aligned in some of these policies that take place globally, and we’re not always completely aligned,” Heyman said.

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Chinese foreign minister spokesperson Lin Jian called the moves “protectionism” and warned the stability of global automobile production may be impacted.

Prime Minister Justin Trudeau discussed the EU’s new auto tariffs on China with European commissioner Ursula von der Leyen Friday at the G7 in Apulia, Italy, but Canada has not changed its policy.

After Biden announced the tariff hike, Trudeau said his government was “watching very closely.”

Yet, a month later, the federal government still has not committed to raising Canadian import tariffs above the current six per cent on Chinese-made vehicles.

Click to play video: 'Canada mulls import tariffs on Chinese-made EVs after U.S. move'
Canada mulls import tariffs on Chinese-made EVs after U.S. move

There are concerns manufacturers will take advantage of Canada’s more relaxed approach to Chinese-made EVs and create a loophole around U.S. import tariffs.

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Heyman cited his previous work to stop the flow of counterfeit goods coming into the U.S. via Canada, which he said were predominantly imported from China, as a cautionary example.

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“So much comes back in that crosses the border between us that it should be fair and honest,” Heyman said.

Innovation, Science and Industry Minister François-Philippe Champagne told Global News this week at the 2024 Canada Automotive Summit that Canada will not be used as a scapegoat.

“One thing that Canada will do is that we will never be a backdoor for China,” Champagne said.

“We’re working with our American friends to make sure that we protect our industry and we will do what it takes to make sure that we have a flourishing industry not only now, but for generations to come.”

When asked by Global News, Champagne did not comment on whether Canada is considering raising tariffs on Chinese EVs.

However, Flavio Volpe, Automotive Parts Manufacturers’ Association president, says he expects the government to fall in line with the U.S.

“After due diligence, the federal government is going to do the same thing — they’re going to put tariffs on a very similar suite of products for China because we’re an integrated North American market,” Volpe said.

“What the Americans have done for Canadian vehicle export into that market is protect that market, and they’re going to expect the same from us.”

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Volpe told Global News he expects Ottawa to announce the tariffs sometime in July after this year’s parliamentary session breaks for the summer. While he understands the government needs time to evaluate its action plan, he says time is of the essence.

“We’re all a little bit late to the game: Canada, U.S., EU,” Volpe said. “But I do think later in the game is better than not being in the game.”

Click to play video: 'Fears of trade war escalating as Honda unveils home of new EV supply chain plant'
Fears of trade war escalating as Honda unveils home of new EV supply chain plant

Some of the hesitancy on Canada’s part may be due to possible Chinese retaliation. China has said it will take “all necessary measures” to safeguard its interests following the tariff hikes.

The North American auto production sector does not export into the Chinese market at high volumes, so Volpe says Chinese tariffs on Canadian and U.S. EVs wouldn’t have much bite. But China could take aim at Canada’s critical minerals and battery development in an effort to slow production.

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“I expect them to have a response that is going to hurt a little bit,” Volpe said. “It’s incumbent on the Canadian government to kind of game out what the Chinese may be doing.”

With billions of dollars of investment into EVs on the line, severing ties isn’t an option.

“We need them and they need our market,” Volpe said. “It might be too late to stop them, but you have to at least slow them down.”

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