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Ottawa is consulting Canadians on how to respond to China’s purported unfair trade practices in marketing its electric vehicles (EVs). Will consumers foot the bill for the new protectionist measures aimed at keeping Chinese competitors from flooding Canada’s automobile market?
Two avenues are open to the government. The first is to stop cheap EVs from entering Canada by means of an American-style 100% tariff, while the second is to level the playing field by introducing a milder tariff, ranging from 17 to 38%, as the Europeans have chosen to do.
In my opinion, it would be dangerous to adopt as draconian a protectionist measure as the US tariff.
Europe has opted instead for a tariff that will level the playing field, taking into account state support for the sector, the environmental impact of EV production and employees’ working conditions. Équiterre prefers this second approach, and here is why.
The need for small cars
Canadians are finding it increasingly difficult to acquire small-sized electric vehicles, a category that has been practically abandoned by North American automakers. These manufacturers prefer to boost sales of oversized, energy-guzzling models, be they gas-
powered or electric. The outcry when Chevrolet announced it was halting production of its Bolt EV in 2023 highlights the need for such vehicles.
This tactic on the part of the domestic auto industry has one main objective: to make the most possible profit by producing large, expensive vehicles, regardless of what Canadians can afford.
The result is that people who want to acquire an affordable new vehicle have very few options left. Small inexpensive models have been on the endangered list for some 10 years now.
That is why the government must avoid excessive tariffs, which would prevent the healthy competition needed to stimulate North American production of small affordable vehicles.
The need to protect the workers
A legitimate case can be made for measures to protect North American autoworkers. A number of communities rely on well-paying jobs in the ever-growing transportation sector, which offer tremendous economic opportunities that are conducive to the transition.
This is important, because there is a great need for human-sized vehicles, buses, trains and public transit infrastructure to move massive numbers of people in our cities, suburbs and regions as efficiently and environmentally-responsibly as possible.
Our governments, manufacturers and supply chain partners have also invested huge sums in these production capacities.
The response by Canadian authorities must therefore reflect the need to adequately protect these investments, jobs and strategic resources, rather than opting for a knee-jerk reaction that would overprotect a sector that mostly ignores the needs of consumers, cost-of-living considerations, road safety and the impact of its products on our cities and towns.
So before we build a wall to keep out these small Chinese vehicles, how about we look at what’s happening within our own walls?
