Canada Preparing Possible Measures Targeting Imports of Chinese EVs

By Robb M. Stewart and Paul Vieira

OTTAWA--Canada is considering policy measures targeting imported Chinese electric vehicles, including echoing the tariffs imposed by the U.S. and Europe in recent weeks.

The federal government said Monday it will next month launch a 30-day consultation on potential responses to protect automotive workers and the country's growing EV industry from unfair trade practices and also prevent trade that could be diverted through Canada from the actions taken by Canada's trading partners.

The steps the country plans to take include a surtax on EVs imported from China, changes to which EVs qualify for the government's rebate program aimed at boosting sales of zero-emissions vehicles, and investment restrictions, Finance Minister Chrystia Freeland said.

Speaking at an auto-parts factory in southern Ontario, Freeland said the auto sector faces unfair competition from "China's intentional, state-directed policy of overcapacity and lack of rigorous labor and environmental standards." She said the government wasn't ruling out any measures that would protect industry and jobs in Canada.

Canada imported about $1.6 billion in Chinese electric vehicles in 2023, according to Chinese customs data reviewed by the Atlantic Council, a Washington-based foreign-policy think tank. Auto manufacturing supports more than 125,000 Canadian jobs, Freeland said.

The Biden administration last month raised the total tariff rate to 102.5% on Chinese EVs, despite extremely low imports. The higher tariff on Chinese EVs, along with levies on other China goods, is part of a political duel pitting the Democrats and Republicans, and which party can impose the toughest trade barriers with China ahead of November elections.

Other jurisdictions have followed, though not to the same degree as the U.S. The European Union said EV imports from China could be subject to additional tariffs of as much as 38%, on top of an existing levy of 10%. Beijing has launched an anti-dumping probe into pork imports from the European Union, in possible retaliation against the EU's moves as trade tensions mount between China and the 27-member bloc.

Turkey also this month revealed plans to impose a 40% additional tariff on imports of cars from China.

"China is taking advantage of the global economic system. China is quite intentionally creating overcapacity in a number of sectors, and exporting that," Freeland said. "We need to protect our national interest."

The minister said the government would consider China's labor and environmental standards as well as national security risks associated with movements of technology in setting policy.

In an interview this month with The Wall Street Journal, Mary Ng, Canada's trade minister, said the government would implement policies to ensure Canada doesn't become a back-door conduit for Chinese exports into the U.S.

Ng said Monday the consultation will seek to gather input from industry on ways to protect the auto sector and jobs in Canada.

Write to Robb M. Stewart at [e-mail] and Paul Vieira at [e-mail]

(END) Dow Jones Newswires

06-24-24 1233ET