Canada’s EV Tariff Dilemma
Canada’s new Liberal government faces mounting pressure to scrap its 100% tariff on electric vehicles (EVs) from China, with critics arguing that the policy hinders both trade and climate objectives. The tariff, implemented last fall in alignment with the U.S. under then-President Joe Biden, has drawn criticism from various sectors, including Canada’s canola farmers.
The decision to maintain or remove the tariff is complicated by Canada’s strained relationship with China and the uncertainty surrounding trade with the U.S. under President Donald Trump. Critics argue that Canada should reassess its position, considering the impact on its climate goals and the canola industry.
Impact on Canola Farmers
China’s retaliatory measures have hit Canadian canola farmers hard, with a 100% surtax on canola oil and meal, and a 25% tariff on seafood and pork. Andre Harpe, canola farmer and chair of the Canadian Canola Growers Association, expressed concern about the ongoing uncertainty.
“We’re the ones taking the brunt of the hit right now,” Harpe said. “We have a new Canadian government coming in … as job one, I would very much like to see them deal with these tariffs.”
Climate Concerns and EV Adoption
The tariff’s impact on Canada’s climate goals is another significant concern. The federal government aims to reduce emissions by 40% below 2005 levels by 2030 and achieve net-zero emissions by 2050. Part of this plan involves promoting EV adoption, with a national target of 100% zero-emission vehicle sales by 2035.
However, the current tariff makes EVs less affordable for many Canadians. Louise Lévesque, senior policy director at Electric Mobility Canada, suggested that removing or adjusting the tariff could help make EVs more accessible.
“If you want EVs to be purchased by Canadian consumers, we need to have affordable models,” Lévesque said. “We know that the Chinese vehicles could fill that gap.”
Balancing Domestic Manufacturing and Affordable EVs
While some experts argue for removing the tariff to promote affordable EVs, others are concerned about the potential impact on Canada’s domestic manufacturing sector. Brian Kingston, president and CEO of the Canadian Vehicle Manufacturers Association, warned that flooding the market with cheap Chinese EVs could undermine the Canadian industry.
“We can absolutely not undermine our own industrial base by allowing these vehicles into the market,” Kingston said.
Experts suggest a balanced approach could be possible, such as implementing a time-limited tariff or collaborating with China on EV technology. Niel Hiscox, president of Clarify Group Inc., proposed a potential joint venture for technology transfer.
As Prime Minister Mark Carney prepares to meet with President Trump, Canada’s stance on EV tariffs will be seen as a test of its economic policymaking approach. The decision will have significant implications for Canada’s trade relationships, climate goals, and automotive industry.
