A former US ambassador to Canada is urging Ottawa to join the US and EU in imposing tariffs on Chinese electric vehicles amid concerns that government subsidies from Beijing are flooding the international market with cheaper cars.
On Wednesday, the EU threatened to impose tariffs of up to 38 percent on imported Chinese electric vehicles starting July 4. That increase comes after US President Joe Biden quadrupled import tariffs on electric vehicles made in China to 100 percent a month ago. on May 14.
Bruce Heyman, who was U.S. ambassador to Canada from 2014 to 2017 under former President Barack Obama, said Canada should follow the United States because the two countries are strong trading partners.
“I think what’s important is that Canada and the United States align on some of these policies that are happening globally, and we’re not always completely aligned,” Heyman said.
Chinese Foreign Minister Lin Jian’s spokesman called the measures “protectionism” and warned that the stability of global auto production could be affected.
Prime Minister Justin Trudeau discussed new EU auto tariffs on China with European Commissioner Ursula von der Leyen on Friday at the G7 meeting in Puglia, Italy, but Canada has not changed its policy.
After Biden announced the tariff increase, Trudeau said his government was “watching very closely.”
However, a month later, the federal government still has not committed to raising Canadian import tariffs above the current six per cent on vehicles made in China.
There are concerns that manufacturers will take advantage of Canada’s more relaxed approach to Chinese-made electric vehicles and create a loophole around U.S. import tariffs.
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Heyman cited his previous work to stem the flow of counterfeit goods entering the U.S. through Canada, which he said were predominantly imported from China, as a cautionary example.
“There are so many things that cross the border between us that should be fair and honest,” Heyman said.
Minister of Innovation, Science and Industry 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 Canada will do is we will never be a backdoor to China,” Champagne said.
“We are working with our American friends to make sure we protect our industry and we will do whatever it takes to make sure we have a thriving industry not just now, but for generations to come.”
When asked by Global News, Champagne did not comment on whether Canada is considering raising tariffs on Chinese electric vehicles.
However, Flavio Volpe, president of the Automotive Parts Manufacturers Association, says he hopes the government will align with the US.
“After due diligence, the federal government will do the same thing: It will impose tariffs on a very similar set of products for China because we are an integrated North American market,” Volpe said.
“What the Americans have done by exporting Canadian vehicles to that market is protect that market, and they will expect the same from us.”
Volpe told Global News he expects Ottawa to announce the tariffs sometime in July, after this year’s parliamentary session ends over the summer. While he understands that the government needs time to evaluate its action plan, he says time is of the essence.
“We’re all a little late to the game: Canada, the US, the EU,” Volpe said. “But I think later in the game is better than not being in the game.”
Some of the hesitation 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 increases.
The North American auto manufacturing sector does not export to the Chinese market in large volumes, so Volpe says Chinese tariffs on Canadian and American electric vehicles would not have much impact. But China could target Canada’s critical minerals and battery development in an effort to curb production.
“I hope they have an answer that will sting a little bit,” Volpe said. “It’s up to the Canadian government to guess what the Chinese might be doing.”
With billions of dollars of EV investment at stake, cutting ties is not an option.
“We need them and they need our market,” Volpe said. “It may be too late to stop them, but at least they have to be stopped.”
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