Canada’s EV Tariff Dilemma
Canada’s new Liberal government is under pressure to reconsider its 100% tariff on electric vehicles (EVs) from China, a policy implemented last fall. Critics argue this move contradicts Canada’s trade and climate objectives, particularly harming canola farmers.
The tariff was introduced following the United States’ similar action under then-President Joe Biden. However, with changing circumstances, including a fractured relationship with the U.S. under new leadership, many now question the wisdom of this policy. “That was a dumb policy, and we followed suit by demonstrating our allegiance [to the U.S.],” said Jessica Green, a political science professor at the University of Toronto.
China has retaliated against Canada’s EV tariff by imposing its own 100% surtax on Canadian canola oil and meal, as well as 25% on seafood and pork. This move has significant implications for Canadian farmers, particularly those in the canola industry. “We’re the ones taking the brunt of the hit right now,” said Andre Harpe, a canola farmer and chair of the Canadian Canola Growers Association.
The Canadian government faces a delicate balancing act between supporting domestic manufacturing and meeting climate goals. Canada 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, but affordability remains a significant barrier for many Canadians.
Experts suggest potential solutions, such as implementing a more targeted tariff similar to Europe’s approach, or setting a time limit on the current tariff to allow North American industry time to develop. Others propose subsidizing the domestic industry or establishing a minimum price for imported EVs.
The decision on EV tariffs will be a significant indicator of Canada’s economic policymaking direction, especially as Prime Minister Mark Carney prepares to meet with U.S. President Donald Trump. As Green noted, “Will [Carney] forge his own path or engage in this weird hokey pokey dance with Trump?”
