OTTAWA – Canada has accused China of undermining global trade rules and flooding the market with electric vehicles (EVs), as Finance Minister Chrystia Freeland initiated a 30-day consultation period to potentially impose new import taxes on Chinese-made EVs.
This move follows similar actions by the United States and the European Commission, who have imposed or are considering import tariffs on Chinese EVs due to unfair subsidies that undercut more expensive vehicles from Europe and North America.
Speaking at an auto parts manufacturing plant in Vaughan, Ontario, Freeland stated that consultations beginning July 2 would investigate China’s market practices related to EVs. “China has been intentionally creating overcapacity and oversupply and exporting that to other countries,” Freeland said. “That is actually not playing by the global trade rules and Canada will not stand for that.”
Since October 2020, Canada has attracted $46 billion in investments for 13 different EV plants and battery factories, with federal and provincial governments offering up to $53 billion in tax credits, production subsidies, and capital investments. Canada is also collaborating closely with the United States to counter China’s dominance in the EV and clean technology sectors.
The tariff investigation, launched under section 53 of the Customs Tariff Act, follows a similar precedent set in 2018 when Canada imposed a retaliatory surtax on U.S. aluminum and steel goods. Freeland noted that the response could extend beyond EVs to include components like batteries and their precursor materials.
The consultation will consider economic harm, national security risks, and environmental, labour, and human rights standards. “I think there is a prima facie case to say China falls short in those areas,” Freeland remarked.
Currently, the only Chinese-made EVs imported into Canada are Tesla models from the company’s Shanghai factory. These vehicles face a six per cent import tariff but qualify for the federal EV rebate of up to $5,000.
Concerns about cheap Chinese EVs have been echoed by Canadian automakers and auto unions. Unifor president Lana Payne and David Adams, president of Global Automakers of Canada, both supported the government’s move, highlighting the importance of protecting Canadian manufacturing jobs and ensuring a level playing field.
Conservative trade critic Kyle Seeback emphasized the priority of safeguarding Canadian workers’ jobs and raised concerns about subsidies for EV battery plants potentially displacing Canadian workers.
China has become the dominant player in the EV industry, manufacturing 70 per cent of EV batteries and 60 per cent of EVs worldwide. The European Commission has launched an anti-subsidy investigation into Chinese EVs, while the U.S. plans to significantly increase import taxes on Chinese EVs and batteries starting in August. China has threatened to retaliate against European goods if Europe proceeds with its surtax plan.