Canada must be 'crystal clear' that surtax on Chinese EVs will stay, head of auto association says

OTTAWA — The president of an association representing automakers says the Canadian government must be “crystal clear” that it intends to keep its surtax on Chinese electric vehicles, as it embarks on a review of the measure. 

Brian Kingston, the p resident and CEO of the  Canadian Vehicle Manufacturers’ Association, which represents Ford, General Motors and Stellantis, says the existing surtax ensures Canada is aligned with the U.S., which has its own 100 per cent levy on Chinese electric vehicles. 

Allowing China’s electric vehicles into the market also puts the North American industry at a disadvantage, given the billions worth of subsidies Beijing has poured into developing its market, the likes of which “you will never see in North America,” he said. There also remain concerns over China’s labour practices and poor environmental regulations, Kingston added.

“I think the government needs to be crystal clear on what its intention is with respect to maintaining the Chinese (electric vehicle) surtax, particularly given where we stand in our negotiations with the United States,” Kingston said, in an interview Friday.

“The surtax is up for review this month and I’m expecting a clear statement from the government that they intend to continue to keep it in place.”

Canada is facing a more challenging landscape with respect to its action against China, with Western premiers calling on Ottawa to lift its surtax on Chinese electric vehicles. That followed Beijing’s decision to slap a 76 per cent tariff on canola seed, which has been viewed as a direct response to Canada’s 100 per cent surtax on China’s electric vehicles, which was implemented last October.

Advocates from outside the traditional automotive sector also say the federal Liberal government should reconsider its move to allow Canadian consumers more access to Chinese electric vehicles, which are among the cheapest options to purchase.

Declining electric vehicle sales, which have been tied to the government’s cancellation of a $5,000 rebate, fuelled louder calls from the auto industry for Ottawa to cancel its zero-emission vehicle mandate, saying the existing targets were unrealistic to meet.

Prime Minister Mark Carney on Friday announced his government was not moving ahead with the 2026 target for companies and instead was launching a 60-day review to look at how additional “flexibility” could be added to the policy, which is designed to see that all new vehicles sold in Canada are zero-emission by 2035.

Clean Energy Canada, based out of Simon Fraser University, released a statement saying that Carney’s decision creates an opening to provide more options for consumers.

Not only should it look for ways to see more European models brought to Canada and bring back its rebate program, it should also lower “ Canada’s 100 per cent tariff on Chinese (electric vehicles) in a way that still balances protection for the auto industry with a healthier car market for consumers, much as Europe has done,” Joanna Kyriazis, the group’s policy and strategic director, said in a statement on Friday. 

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, told reporters on Friday that any potential loosening of the surtax would have to offer some benefit to Canadian industries and workers, which is currently not the case. 

“I’m not advocating for a loosening of them,” he said, “but I think it’s important that we continue to talk to them.”

“And as much as we don’t like the way that the Chinese have built the industry, we know that’s the future of the industry.”

Volpe suggested it would be unwise to risk giving up Canada’s market out of pressure from those he called “EV enthusiasts.”

Speaking at his announcement on Friday, Carney said the government would be moving ahead with “new options” to bring in more affordable electric vehicle options.

No further details were provided, but cabinet ministers have said the Liberals were looking for ways to bring back a rebate program.

Asked whether Carney was considering lifting the 100 per cent surtax, the prime minister did not directly say, but said Canada was beginning “intense engagement” with China regarding canola as well as other agriculture and seafood products.

“I’m sure those discussions will branch out, but it’s too early to come to any conclusions on those.”

A spokeswoman for Finance Minister Francois-Philippe Champagne confirmed to National Post on Thursday that “o fficials are currently undertaking work” on the upcoming review, which would entail assessing China’s labour practices as well as the scope and rates of the surtaxes to ensure they “remain appropriate.” 

Besides the surtax on Chinese electric vehicles, which was introduced by former prime minister Justin Trudeau, Carney’s predecessor also implemented a 25 per cent surtax on Chinese steel and aluminum. Both surtaxes were introduced last October.

Nova Scotia MP Kody Blois, whom Carney named as his parliamentary secretary, is set to join Saskatchewan Premier Scott Moe on a trade mission to China starting Saturday.

Moe told reporters on Thursday that any resolution to the tariff on canola would have to be reached by Carney and China’s President Xi  Jinping. 

Saskatchewan is home to the biggest share of Canada’s canola industry, followed by Alberta and Manitoba.

Alberta Premier Danielle Smith has also called on the federal government to reconsider its surtax on Chinese electric vehicles in an effort to end the trade dispute.

Conservative Leader Pierre Poilievre, who was recently elected as an MP in Alberta through a byelection, told reporters in Ottawa on Friday that he “respectfully” disagrees with Moe’s call for the surtax to be lifted.

He said China’s electric vehicles would act as “roving surveillance vehicles” on Canadian streets, referring to national security risks that have been expressed regarding the access Beijing could have to certain Chinese technologies operating in North America.

Instead, Poilievre said, the federal government ought to cancel the $1 billion loan the Canada Infrastructure Bank granted to BC Ferries to purchase four ships from a Chinese shipbuilder.

– With files from Christopher Nardi and Catherine Levesque 

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