In a significant shift, Canada has followed the United States by imposing a 100% tariff on electric vehicles (EVs) from the Chinese mainland. This decision comes three months after the U.S. announced similar tariffs, aiming to protect domestic industries from foreign competition.
The Trudeau government faced a tough choice: risk retaliatory tariffs from China on Canada's smaller economy or appease the U.S. to maintain favorable trade relations. Memories of the 2019 trade retaliation against Canadian canola, pork, and soybeans lingered, adding pressure to Canada's decision.
Officially, Canadian Deputy Prime Minister and Minister of Finance Chrystia Freeland justified the tariffs by stating that \"China has an intentional state-directed policy of overcapacity and oversupply designed to cripple our own industry … We simply will not allow that to happen to our EV sector, which has shown such promise.\" However, critics argue that this justification overlooks the common role of state-directed policies in successful industrialization, citing examples from Japan, Germany, South Korea, the U.S., and even Canada itself.
Moreover, China's strategic investment in the EV sector since 2001, including the development of safer and cost-effective lithium iron phosphate batteries and support for public transport adoption, has been pivotal in its success. The country also welcomed foreign investments, such as Tesla, fostering a competitive environment that spurred further innovation.
As Canada navigates this complex trade landscape, the long-term impacts on its EV industry and international relations remain to be seen.
Reference(s):
cgtn.com
