Ottawa announces consultation on electric vehicles made in China this summer

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OTTAWA — The federal government will launch a short consultation this summer to determine whether Canada should follow other countries in enacting punitive tariffs on imports of Chinese-made electric vehicles.

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

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

Freeland said potential policy actions could include an additional tax on Chinese electric vehicle imports under Section 53 of the Tariff Act, excluding certain electric vehicles from eligibility for federal subsidies and “potentially broader restrictions on investment in Canada “.

The consultations will seek comments on cyber and data security related to the protection of the privacy of Canadians and Canada’s national interests. The government will also seek insights into China’s labor and environmental standards.

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China has become the world’s largest producer and exporter of electric vehicles in recent years, with annual electric vehicle exports totaling $47.2 billion in 2023, prompting industrialized countries to take steps to prevent flooding of China’s electric vehicle markets.

US President Joe Biden announced in May that the US would raise tariffs on Chinese electric vehicles from 25% to 100% this year. The European Commission recently announced that it will impose tariffs of up to 38% on Chinese-made electric vehicles starting July 4.

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

Freeland said that by launching these consultations, Canada will act in concert with its closest allies to prevent it from becoming “a dumping ground for Chinese oversupply.”

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

“We have been clear that nothing is off the table and all possible tools are on the table,” she said. “That includes using Section 53. That’s a very powerful tool in Canada’s toolkit. It gives very strong and very broad powers to the finance minister to act.”

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

Ontario Premier Doug Ford, who made a call last week to “immediately match or exceed U.S. tariffs on imports from China,” told X that he was glad to see the federal government heeding his calls and taking “swift action.” to protect Chinese jobs. automotive sector.

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

Freeland said China threatens Canada’s EV sector’s ability to compete by flooding global markets under state policies.

“Let me be very clear, we live 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 exporting that capacity to other countries.” , she. said.

“That overcapacity is created with very problematic labor standards, very problematic environmental standards. And we should not forget that there is a national security aspect, especially for high-tech exports. So we know we have to defend our national interest.”

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

Unifor president Lana Payne said she welcomed the launch of this consultation “on unfair imports of electric vehicles from China” as “welcome and necessary news”.

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

Flavio Volpe, president of the Auto Parts Manufacturers Association, said all the different partners will come together to come up with a “careful response” and boasted that Canada is fighting alongside the “greatest powers in the world” for its auto industry.

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

NDP industry critic Brian Masse said it’s “a relief to see this government finally stepping up and getting to work on securing a plan to protect Canadian auto workers from unfair trade practices” and calling for rebates on Canadian electric vehicles and for “those coming from countries that meet equivalent labor and environmental standards.”

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