As it was previously expected, in a move to safeguard Canada’s burgeoning electric vehicle (EV) industry and its auto workers, Deputy Prime Minister and Minister of Finance Chrystia Freeland, along with Minister of Export Promotion, International Trade and Economic Development Mary Ng, announced today the launch of a 30-day public consultation starting on July 2, 2024. This initiative aims to explore policy responses to counter what they deem to be unfair trade practices and prevent trade diversion due to recent actions by Canada’s trading partners.
The consultations will gather insights on various potential policy measures, including the imposition of a surtax under section 53 of the Customs Tariff. Other possible actions being considered are adjustments to the federal Incentives for Zero-Emission Vehicles (iZEV) program not to include Chinese-manufactured electric vehicles and investment restrictions. These discussions will also encompass cyber and data security issues pertinent to protecting Canadians’ privacy and national security.
The government emphasized the need for measures to ensure a fair competitive environment for Canadian auto workers and the EV sector in domestic, North American, and global markets. Freeland highlighted the importance of addressing the threat posed by China’s state-directed policy of overcapacity and its insufficient labour and environmental standards, which contribute to a global oversupply of EVs.
“Auto manufacturing directly supports over 125,000 good-paying Canadian jobs, many of which are unionized,” Freeland stated. “Canada’s electric vehicle supply chain potential is ranked first in the world, and our government is committed to leveraging this growth opportunity to ensure the success of Canadian auto workers into the future.”
The Canadian government’s stance is partly a reaction to increased trade protections announced by the United States and the European Union against Chinese EV imports. There is concern that without similar measures, Canada could face a surge in Chinese EV imports, undermining local producers.
In contrast, China has criticized these considerations, with industry experts suggesting that such tariffs would have minimal impact on China’s EV sector and accusing Canadian officials of yielding to U.S. pressure.
The push for electric vehicles in Canada, however, is not without challenges. A significant obstacle is the high cost of EVs. The average price of a new vehicle in Canada stands at $66,000, while a new battery electric vehicle averages around $73,000, according to the Canadian Black Book. Although the government’s incentive program offers up to $5,000 to buyers of zero-emissions vehicles, this subsidy often falls short of making EVs affordable for many consumers, where cheaper Chinese electric vehicles could have partially alleviated this issue.
The outcome of the consultations will be crucial in shaping Canada’s approach to fostering a competitive and sustainable EV industry while protecting the interests of its auto workers.