Canada should not ape US by imposing tariffs on EVs

In a mimicry of the US, imposing sanctions of up to 100 percent on Chinese-made EVs, the EU has now declared temporary anti-subsidy tariffs of up to 38.1 percent on these vehicles. Adding to the strain, Canada, despite limited trade with China in automobiles, is mirroring the US' actions by readying itself to levy tariffs on EVs imported from China.

In June, Doug Ford, premier of Canada's Ontario province, said he hoped the Justin Trudeau government would impose as much extra tariffs on Chinese-made EVs as the US.

In fact, Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland announced that a 30-day public consultation period has been initiated from Tuesday to discuss a series of proposed measures on Chinese-made EVs, including imposing additional taxes under Section 53 of Canada's Customs Act, as well as adjusting federal zero-emission vehicle incentive programs and investment restrictions among other potential options.

According to Statistics Canada, the total value of Chinese-made EVs imported by Canada in 2023 was 2.2 billion Canadian dollars ($1.60 billion). Canada's goal is to ensure zero-emission vehicles account for 60 percent of all new light vehicles sold in the country by 2030 and 100 percent by 2035.

It is worth noting that, despite not being the biggest supplier of automobiles to Canada, China plays a significant role in Canada's EV battery market. In 2021, nearly 80 percent of the lithium-ion batteries for EVs worldwide were produced in China, and the International Energy Agency said in 2023 that EVs made in China accounted for around 60 percent of global EV sales.

At present, Canada imposes about 6 percent tariffs on cars imported from China. According to Statistics Canada, in the first four months of this year, imports of EVs from China to Canada increased by more than 1,200 percent year-on-year, with most of these vehicles being produced in Tesla factories.

Canada's domestic electric vehicle market is not well developed. About 185,000 pure electric and plug-in vehicles were registered in 2023, accounting for only 11 percent of all new car registrations.

China consumes much more EVs than it exports, which means it has no reason to dump EVs in overseas markets to make profits. Hence, the US' and EU's accusations that China is dumping EVs to address its "overcapacity" problem sound ridiculous.

The market will take time to determine the demand and supply, and development patterns of the new energy industry, but given the worsening climate crisis, the world cannot wait any longer to mitigate climate change. Policy interventions and guidance can offset the drawbacks of the market and expedite the development of the new energy industry. In this context, the policies China has implemented in recent years favoring the new energy industry are scientific, conform to World Trade Organization regulations and contribute to addressing the climate crisis.

Sino-Canadian ties at present are frosty. By illegally detaining Huawei Chief Financial Officer Meng Wanzhou in December 2014, Canada acted at the behest of the US. And by preparing to impose tariffs on Chinese-made EVs, Canada is again serving the US' interests.

But since the share of Sino-Canadian trade in new energy vehicles is limited, it will have "little impact" on China's EV exports. Canada's move is more about sending a political signal and pleasing the US, sacrificing Sino-Canadian relations in the process. Canada has failed to realize that China's promotion of EVs is in conformity with global efforts to combat climate change. Since the major global powers reached a consensus on addressing climate change, only China has been diligently fulfilling its commitments. If China does not push forward, perhaps no other country would take on this responsibility.

In the past, Canada has maintained good relations with China, and bilateral trade has brought considerable benefits to both sides. China and Canada should work together to address bilateral and multilateral issues, including addressing climate change, to make greater contributions to global efforts to fighting climate change.

The author is a researcher at the Institute of China's Development Studies, Renmin University of China.

The views don't necessarily reflect those of China Daily.

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