As EV Tariff Kicks In, Canada Eyes Asian Markets to Offset Potential Chinese Retaliation: Minister

Riders pass through a canola field as they take an afternoon trail ride near Cremona, Alta., in a file photo. The Canadian Press/Jeff McIntosh

Canada’s new tariff on Chinese electric vehicles took effect on Oct. 1, and as Beijing threatens to ban Canadian canola in response, Trade Minister Mary Ng says the government is looking to diversify canola exports to other Indo-Pacific markets.

A 100 percent tariff now applies to all Chinese-made EVs imported into Canada, including certain hybrid passenger cars, trucks, buses, and delivery vans.

After Ottawa announced the EV tariff in August, China threatened to launch an anti-dumping investigation into Canadian canola.

When asked about China’s potential measures, Ng told reporters the government is looking at addressing the vulnerability by diversifying its imports to markets in the Indo-Pacific region. She noted that negotiations are ongoing with Indonesia, which has a population of roughly 280 million, and with other countries in the Association of Southeast Asian Nations, a political and economic union of 10 member states.

“We are in negotiations with that country, along with the other ASEAN countries, and we have worked very, very hard at helping Canadian businesses, including those in agri-food and farmers, to access these markets,” Ng said during an Oct. 1 press conference in Ottawa.

Canada’s tariffs on Chinese EVs align with similar measures by the United States and the European Union, both of which recently imposed tariffs on Chinese electric vehicles. The United States raised tariffs on Chinese EVs to 100 percent from 25 percent in August, while the EU imposed a tariff of up to 37.6 percent starting in July.

China’s Anti-Dumping Probe

Beijing previously banned Canadian canola in 2019 in a move that was widely seen as retaliation for Ottawa’s arrest of Huawei executive Meng Wanzhou. That three-year ban cost Canada an estimated $1.54 billion to $2.35 billion, according to the Canola Council of Canada.

Ng dismissed China’s anti-dumping probe, saying that Canadian producers adhere to fair trade practices. She reiterated Canada’s decision to increase tariffs on Chinese-made EVs to oppose Beijing’s unfair trade practices, including state-directed overcapacity and excessive subsidization, which she said harm Canadian workers in various industries.

“No one, absolutely no one, has ever accused Canada and Canadian producers of dumping into global marketplaces,            because we are a fair trading country, and our producers and our exporters follow the rule of law on tariffs,” Ng said.

China was a major consumer of Canadian canola before the 2019 ban and continues to be, with the Canola Council reporting that canola seed imports “returned to more normal levels” after the ban was lifted in May 2022. Last year, China accounted for nearly one-third of Canada’s total canola exports, valued at $15.8 billion, according to the council.

Asked why Canada remains reliant on the Chinese canola market despite the regime’s previous measures, including the targeting of Canadian citizens during the Huawei dispute, Ng said that Canadian businesses and producers are the ones that “make a choice about where they sell.”

“But absolutely, [we are] working with the industry to make sure that there are increasingly more markets around the world,” she added.

In addition to the tariff on EVs, Ottawa is set to impose a 25 percent tariff on Chinese steel and aluminum products, which will take effect on Oct. 22.

The finance department said in an Oct. 1 press release that the government plans to create a framework for considering requests for tariff relief, allowing Canadian industries time to adjust their supply chains.