Canada’s new tariffs on Chinese electric vehicles will affect many industries and could have implications far beyond the electric vehicle market, analysts said.
100% tariffs on imports of Chinese EVs (and some hybrid vehicles) including cars, buses, trucks and delivery vehicles go into effect on Tuesday After 30 days consultation period during the summer. The 25% surcharge on steel and aluminum imports from China will begin on October 15th.
The move is aimed at keeping cheap, well-made electric vehicles from China at bay in order to grow and protect Canada’s nascent EV sector, but critics argue that environmental goals and trade War is looming, with many warnings that it could have a number of repercussions, including for other sectors of Canada.
“I don’t think this will be very helpful,” said Andrew Bell, director of the Alberta Electric Vehicle Association.
Fourteen years ago, Bell bought his first plug-in hybrid and has been trying to get other drivers into it ever since. He argued that the tariffs are an “unnecessary barrier” to importing Chinese cars to encourage adoption, as they effectively double the price of EVs from China.
“Here, the Government of Canada is trying to encourage Canadians to adopt electric vehicles. There are high-quality, low-cost options here,” he said.
Currently, the cheapest EV on the market is Chinese automaker BYD’s Seagull, which costs about CAD 13,000.
These Chinese cars have not yet entered Canada, but manufacturers are lobbying the federal government for higher tariffs to prevent them from flooding the market.
Canada is also currently 30 days consultation The additions to Chinese-made batteries and critical minerals came after learning of “unfair competition with China, including extensive subsidies, and a lack of strict labor and environmental standards,” according to an announcement on the Treasury Department’s website. Tax-related measures were reportedly taken.
“Level the playing field”
Prime Minister Justin Trudeau EV tariffs announced in late August Amid pressure from industry, he said the goal is to “level the playing field for Canadian workers.” He also accused China of unfair state subsidies for production, something he alluded to.
“Actors like China choose to give themselves unfair advantages in global markets, threaten the security of our nation’s vital industries, and displace dedicated Canadian auto and metal workers. is taking action to address this,” he said.
for many months There was speculation about how Canada would approach the issue.Considering that Canada’s largest trading partner, the United States, imposed 100 per cent tariffs earlier this year. The European Union has taken a more cautious stance, raising the surcharge on Chinese EVs from 10% to 36.3%.
Canada’s move was seen as a victory not only for research and development but also for those in the auto industry.
“We want high-quality jobs for our students and all the trickle-down effects in the auto sector,” said Olivier Trescase, an engineering professor and director of the Center for Electric Vehicle Research at the University of Toronto.
Trescases and his students are researching power electronics converters (the boxes inside EVs that handle energy between the battery and motors and other systems), and Ottawa is investing heavily in funding the innovation. He said he was donating funds.
“I think it’s absolutely important that that money is not wasted and that it creates new jobs, prosperity and economic activity for Canadians,” he said.
find balance
Some industry analysts, including Gill Lunn, associate professor of law and business at Toronto Metropolitan University’s Ted Rogers School of Management, expected Canada to take the European Union route.
“Given that it’s an election year in the United States, I feel there must have been strong political pressure on Canada,” he said.
Lunn said he is concerned about adoption rates, given that the federal government’s EV sales mandate regulations include plans to: Phase out sales of gasoline vehicles by 2035 And compared to China, Canada’s EV industry is still in its infancy.
“There’s a lot of catching up to do,” he said.
The federal Liberal government has pumped billions of dollars into auto investment. Battery factory in St. Thomas, Ontario.one Located in Windsor, Ontario.and multi-billion dollar expansion Honda produces EVs at its Alliston, Ontario plant.
Still, a lot is riding on these efforts, given that China has been investing in the EV industry for the better part of the past two decades.
“It all depends on how well Canada’s domestic EV industry takes off,” Lunn said.
New tariffs on Chinese-made electric vehicles are aimed at protecting Canada’s emerging manufacturing industry, but there are concerns about what potentially higher-priced EVs could mean for already limited competition. are.
China dominates the EV market
Investing in cars takes time, and “now China is They completely dominate the market.” Els said the time it would take for a mine to be operational is in the order of decades.
According to company data, China accounts for 55% of the battery power flowing on roads around the world, which comes from mining minerals such as cobalt and lithium.
Domestically, China surpassed historic benchmarks this summer. More than half of all vehicles sold in China in July were EVs and plug-in hybrids. The only country with a higher rate is Norway, with over 80%.
Additionally, Els said there are hundreds of different EV brands and dozens of automakers to choose from. “The fact that they control the entire supply chain around EVs makes them a strong competitor in this space,” he said.
Nevertheless, Els suspects the federal government had to make a difficult choice, considering that increased competition would ultimately drive down prices.
“If the only goal is to electrify parking lots, we shouldn’t impose tariffs on imported goods,” he said, but added, “If we open the gates to China completely, we will never undermine China’s dominance.” I can’t do that.”
“Trade war breaks out”
Perhaps unsurprisingly, there are other considerations for Ottawa amidst the economic issues surrounding the proliferation of EVs.
Immediately after the tariff announcement, China has announced anti-dumping investigation Canola imported from Canada. According to the Canadian Rapeseed Council, China is the second largest importer of Canadian rapeseed after the United States, with a valuation of C$5 billion in 2023.
China also Complaints to the World Trade Organizationthe same tactic the EU used after announcing additional taxes on Chinese-made EVs.
Now that the tariffs are in effect, some industry players are seeking a commitment from the federal government that the tariffs will not remain in effect indefinitely.
“It needs to be defined as a five- or seven-year program,” said Stephen Bieda, executive director of the Electric Vehicle Association.
Jiatong Zhong, assistant professor of economics at the University of Alberta Edmonton, echoed similar sentiments.
“Tariffs are a short- to medium-term policy tool designed to buy time for Canadian and U.S. manufacturers to become competitive on price and quality,” he said.
Global Affairs Canada said in a statement to CBC News that the surtax is “an exceptional response to the specific and exceptional challenges posed by China’s non-market policies and practices.” He did not respond to questions about whether there are plans to phase out the tariffs.
In the meantime, there is a possibility that China may escalate its actions, but some industry insiders point out that China has stopped short of actually imposing tariffs, pointing out that there are significant economic disincentives for both sides. There is.
“There’s a trade war brewing,” said Lan of Toronto Metropolitan University.
Canadian farmers could be caught in the middle of a political dispute after China announced it would launch an anti-dumping investigation into rapeseed imports after Canada imposed 100% tariffs on Chinese-made electric cars. be.
