Should Canada ease its 100% tariff on electric vehicles from China amid trade war with U.S.?

Canada's commercialized warfare with the United States has immoderate economists pondering whether the national authorities should easiness oregon assistance its 100 per cent tariff connected Chinese electrical vehicles, a determination some say could spur EV purchases and present a stroke to Elon Musk's Tesla.

Automakers, however, accidental the tariffs are critical to protecting this country's nascent EV industry.

Canada followed the U.S. successful slapping the tariffs connected Chinese EVs past fall, while besides putting a 25 per cent surtax connected imports of alloy and aluminum products from China.

That was earlier Donald Trump became U.S. president and deed Canada with a tempest of tariffs, including connected alloy and aluminum utilized successful conveyance manufacturing.

Public sentiment has besides soured connected Trump advisor and tech billionaire Musk, whose Teslas are the top-selling EVs successful Canada. Politicians person mused astir targeted actions against Tesla, with NDP Leader Jagmeet Singh and erstwhile Liberal enactment campaigner Chrystia Freeland some pitching 100 per cent tariffs connected the vehicles.

Julian Karaguesian, an economist and lecturer at McGill University successful Montreal, said it's clip to rethink the tariffs connected China.

"I bash deliberation quietly, we're reasoning astir easing immoderate of those measures. And I really deliberation we should," helium said.

"If we wanted to person a targeted effect to the Trump medication into his biggest fiscal supporter, we don't person to tariff Tesla oregon American EVs.... We would conscionable person to instrumentality disconnected the tariff connected the Chinese."

Chinese automaker BYD debuted its Seagull EV past twelvemonth astatine a starting terms of astir $14,600 Cdn for a 305-kilometre-range version. The cheapest options disposable successful Canada, by contrast, start astatine astir $40,000.

Meanwhile, Canada's tariffs have sparked retaliation from China, where officials called them discriminatory and said they "seriously interruption World Trade Organization rules."

Effective Thursday, China's Ministry of Commerce has said it volition use a 100 per cent tariff connected Canadian rapeseed oil, lipid cakes and pea imports, and a 25 per cent work connected Canadian aquatic products and pork — causing large concerns for Canadian farmers.

WATCH | Farmers telephone for national enactment connected looming tariffs from China:

Karaguesian said Canada could physique retired its EV manufacture by inviting Indian and Chinese manufacturers, alongside American and European operators, to acceptable up factories successful Canada.

The thought of gathering a person commercialized narration with China is inactive somewhat taboo, helium said, and some person been "aghast" erstwhile he's suggested it. But helium argues that Canada's stance against China has mostly been to appease the U.S.: "What concern quarrels bash we person with China that aren't manufactured successful Washington?"

It whitethorn beryllium clip to halt worrying astir retaliation from Canada's unpredictable confederate neighbour, Karaguesian said, arguing that Trump and others successful the U.S. authorities look to presumption Canada much arsenic a "vassal state" than a respected spouse — a signifier helium said emerged agelong earlier Trump took office.

"Let's conscionable beryllium a sovereign nation, pursue our ain champion interests," helium said. "Because adjacent erstwhile we bash everything for them, it whitethorn not person immoderate benignant of reward astatine all."

Canadian automakers back tariffs

Automakers in Canada person stood firmly in enactment of the tariffs connected electrical vehicles from China.

Canadian Vehicle Manufacturers' Association president and CEO Brian Kingston said the tariffs connected Chinese EVs were "absolutely" the close decision and that the situation posed by U.S. tariffs connected Canadian goods — which summation costs for consumers and endanger jobs successful Canada's car manufacture — person lone strengthened that case.

Canada has attracted much than $46 cardinal successful EV concern since 2020, according to a June 2024 study from the Office of the Parliamentary Budget Officer, and Kingston said allowing Chinese EVs to flood the marketplace would enactment those investments — and the improvement of the entire industry — at risk.

"China has capableness to physique astir 80 per cent of planetary conveyance demand. There is simply a immense hazard if those vehicles were to flood the Canadian market," helium said.

Kingston said he's confident Canada volition beryllium capable to nutrient competitively priced EVs if it's given time to drawback up to China.

"North Americans emotion to thrust larger vehicles, pickup trucks and SUVs. You're seeing electrified formats of those vehicles with progressively ample ranges," helium said. "So yes, the options to Canadians are getting amended each azygous day, and prices implicit clip volition go progressively competitive."

David Adams, president and CEO of Global Automakers of Canada, said opening the doors to Chinese EVs now would render Canada's investments successful the assemblage pointless, due to the fact that the Chinese vehicles would instrumentality implicit the market.

"The caller tariffs from the U.S. surely muddy the waters a small bit, but they don't undermine the cardinal crushed wherefore those tariffs were enactment successful place," he said.

Hugo Cordeau, a PhD candidate successful economics astatine the University of Toronto who researches clime policies, said helium worries astir a imaginable backlash from the U.S. if Canada were to spell backmost connected its tariffs connected Chinese EVs.

He said there whitethorn beryllium a mediate ground, noting the European Union took a much "sensible" approach by expanding its surtax connected Chinese EVs from 10 per cent to arsenic precocious arsenic 45 per cent and incentivizing Chinese companies to unfastened factories successful Europe.

"I judge it's conscionable a double-edged sword. I deliberation we misstepped initially, I deliberation we should person went with the EU," Cordeau said. "I deliberation there's probably inactive clip to align with the EU without 100 per cent dropping the policy."

Reducing prices connected inexpensive EVs would beryllium "great" for Canadian consumers, helium said, arguing that in the agelong run, allowing much contention would besides beryllium bully for the Canadian car industry, which helium said has truthful far focused connected high-end, luxury EVs.

WATCH | More U.S. tariffs are coming. So are immoderate from China:

Canada inactive 'at the mercy' of U.S., prof says

Sumeet Gulati, a prof successful biology and assets economics astatine the University of British Columbia successful Vancouver, said allowing cheaper Chinese vehicles onto the marketplace could besides spur more charging stations — the deficiency of which is seen arsenic 1 of the biggest deterrents for consumers considering buying an EV.

He said if the national authorities is falling abbreviated of its people to signifier retired income of gas-powered cars and trucks by 2035, it will request to scope retired to different countries for much EVs to assistance Canada reach its goal.

But Gulati said portion helium was disappointed by the national government's announcement of the tariffs connected China past fall, helium understood the determination due to the fact that of however integrated the Canadian and U.S. car industries are.

"I don't deliberation we have different choice because we person this tightly integrated market," helium said.

For now, Gulati said, Canada should hold astir six months for the tariff warfare to settee earlier conceding that the Canadian and American car industries person been "decoupled."

"I deliberation we are astatine this point, unfortunately, beauteous overmuch astatine the mercy of what the U.S. authorities does," helium said.