This editorial was written and published by the Globe & Mail on May 17, 2025.
This month marks the height of the planting season for canola on the Prairies – a leap of faith by farmers in any year. They hope for enough rain, but not so much that it floods. They hope for sun, but not so much that there is drought. They hope that come the fall, a thousand stars will have aligned.
But this year, the leap of faith is even bigger. That is because of the enormous uncertainty created by the punishingly high counter-tariffs imposed by China on Canadian canola oil and meal exports (along with other agricultural products) as retaliation for Ottawa’s earlier tariffs on imports of Chinese electric vehicles.
Canola, pork and seafood producers are collateral damage in the brewing trade war between Canada and China. Despite a supposed “anti-discrimination” investigation by China, it is crystal clear that agriculture has been chosen in order to inflict maximum economic pain on Canada.
And that pain is considerable. China is a huge buyer of canola, with $1-billion in oil and meal bought in 2024, an export market second only to the United States. (For the moment, $4-billion in seed exports are unaffected by tariffs.) All other markets are distant also-rans.
For pork producers, it’s a similar story. China, which buys $480-million of Canadian pork, is this country’s third biggest export market. Crucially, it buys pork products such as pig heads and tails that aren’t in high demand elsewhere. The industry says that without tariff relief, pork byproducts will simply be sent to rendering plants.
That’s the pain. What’s the gain? Initially, the federal Liberals were talking up the strategic merits of “friendshoring” within North America and co-operating with the United States on protecting the auto industry from Chinese EVs. In the era of Trump, those ambitions are not just dead, but laughable.
There was a bigger, unspoken reason: safeguarding the $52.5-billion in federal and provincial subsidies for the EV industry. (Parts of that funding are contingent on production levels and the continued existence of U.S. EV subsidies.)
Ottawa could protect would-be EV manufacturers from Chinese competitors, but it has not been able to shield them from the laws of economics. NorthvoltAB’s battery plant in Quebec is on hold following the bankruptcy protection filing of its parent company.
In February, Stellantis delayed the retooling of its Brampton plant. And earlier this week, Honda Canada hit the pause button on its $15-billion EV initiative in Ontario, pushing back the start by two years due to softening consumer demand.
The case for those subsidies was always weak. Claims of a quick payback of government funds from increased economic activity were ill-founded. The Parliamentary Budget Officer estimated in 2023, for instance, that it would take 15 years of full production for the subsidies to Volkswagen to pay for themselves.
Even that distant payday from the sector seems optimistic now as consumer demand ebbs.
It is an all too familiar end to the sad story of government subsidies. What starts out with fanfare and a big splash of taxpayer cash runs into the realities of the market.
So, the gains from EV tariffs, always questionable, are now evaporating. Clearly, the federal government needs to rethink its approach, both to spare Canada’s agricultural sector from further pain, and to avoid wasting taxpayer dollars.
That rethink need not be a capitulation to China. As a start, Ottawa could look to the European Union, which took a more nuanced approach to tariffs on Chinese EVs – one that did not simply copy and paste the American policy.
Lower tariffs, on the reasonable assumption that Beijing would similarly de-escalate, would cushion the impact on agricultural producers. Ottawa should make sure that it offers temporary support to offset any remaining downdraft.
De-escalation by itself is not enough. Ottawa needs to seek an agreement with China that would allow for the assembly of its electric vehicles, similar to arrangements made with Japanese automakers decades ago. Even better if those deals can be negotiated in tandem with any effort by the EU.
One thing is certain: canola, pork and other agricultural producers should not have to bear the cost of Ottawa’s misguided efforts to shield the automobile industry.
Why some advocates say Canada should ease tariffs on Chinese electric vehicles
This article was written by Marco Chown Oved and was published in the Toronto Star on November 2, 2024.
An electric vehicle production line at a Leapmotor factory in China. Chinese electric vehicles are being hit with tariffs that will keep them out of Canada.
If you live in Canada and want to buy an electric vehicle, you’re going to shell out far more than you would if you lived elsewhere.
In China, you can purchase the compact BYD Seagull for 90,000 yuan — or about $17,000.
In Switzerland, the similarly sized Dongfeng Nammi Box runs about $27,000.
But here, the cheapest EV is the Fiat 500e, a small three-door hatchback, which comes in around $40,000.
That’s a 48 per cent surcharge, essentially for living in Canada. Or, more precisely, because Canada is keeping cheap, Chinese-built EVs out.
There had been some hope that cheaper EVs were coming to Canada, but that was extinguished this summer, when the federal government announced 100 per cent tariffs on Chinese EVs, essentially guaranteeing they will not be available anytime soon.
Support for this decision has been widespread — from industry, unions and partisans across the political spectrum, who say it will protect Canada’s nascent domestic EV supply chain, which has been promised more than $50 billion in public subsidies, and all the jobs and economic ripple effects the auto industry provides. The tariffs are also being justified as a barrier to keep Chinese spyware out of North American cars.
But while few would advocate for dropping the tariffs entirely and allowing Chinese EVs to flood the market, keeping them out has quantifiable costs that haven’t been widely acknowledged.
Environmentalists and green economists say the tariffs come at a steep cost to the Canadian consumer, who will shell out tens of thousands of dollars more for an EV, and to the climate, which will be forced to absorb additional carbon, due to the slower uptake of more expensive EVs.
Ralph Torrie, director of research at Corporate Knights, has crunched the numbers in a bid to show the opportunity cost of keeping Chinese EVs out of Canada.
He says that if cheap Chinese EVs were available in Canada, they would supercharge EV adoption, adding more than 1.8 million zeroemission electric vehicles to our roads over the next decade and lowering our carbon emissions by almost 28 million tonnes.
Ultra-low-cost EVs would also free up more than $21.6 billion in family budgets (that’s $11,675 per family), he says — money that will now be spent on more expensive EVs, gas cars and gasoline instead.
Torrie says the tariffs are going to imperil our climate targets, drive inflation and dampen economic growth by eating up billions in disposable income.
What’s more, there are those who say the tariffs could end up failing to achieve their goal of fostering a local EV industry. Some who have seen Chinese EVs up close — including the CEO of Ford Motor — say they are so advanced and so cheap, legacy carmakers might never catch up.
In other words, they suggest, Chinese EVs are on track to dominate globally, and these tariffs could end up doing nothing but forestalling the inevitable.
Until only a few months ago, EVs appeared to have a magic power to bring erstwhile opponents together, with environmentalists and business leaders, Liberals and Conservatives, unions and management working to encourage the development of a domestic EV supply chain to reduce carbon emissions and provide a new generation of blue-collar jobs.
The tariffs, however, have shattered this alliance, with critics saying that economic development is being put ahead of emissions reductions.
“We can’t lose sight of the fact that getting affordable electric cars into people’s hands isn’t something that is optional. It is essential to achieving our climate goals,” wrote Nate Wallace, clean transportation program manager at Environmental Defence, in a submission to the federal government calling for lower tariffs.
The number one barrier to EV adoption is sticker price. Despite many studies showing the overall cost of owning an EV is cheaper in the long-run than a gasoline-powered car, they remain significantly more expensive upfront in the North American market — approximately 25 per cent, depending on the make and model.
In China, however, EVs have achieved price parity with cars powered by internal combustion engines across price points — from the cheapest models to the most luxurious — and the results speak for themselves: China leads the world in EV sales, with more than one third of all new cars powered by batteries. In fact, more than 60 per cent of all EVs bought globally are purchased in China.
For mass adoption to take off in Canada, EV prices would have to drop by one third to one half, according to a Scotiabank analysis put out last year. This is also how much cheaper Chinese EVs are today.
Yet, EVs in Canada are only getting more expensive. The two cheapest models on the market — the Chevy Bolt and Nissan Leaf — were recently discontinued. They both retailed for several thousand dollars less than the cheapest models today.
“The only reason why low-priced electric vehicles from China pose any kind of threat to this industry is because the legacy automakers in North America have so far refused to bring affordable electric vehicle models to market,” Wallace wrote.
Tim Burrows, president of the Electric Vehicle Society, a nonprofit that promotes EVs as a climate solution, says the tariffs on Chinese EVs appear at first glance to be jumping the gun.
“There are no vehicles that it’s going on in Canada,” he said. “We don’t have Chinese EVs and we have no EV industry to protect yet.”
But Burrows sees how tariffs are necessary to prevent cheap Chinese EVs from flooding the North American car market. Our auto industry needs time to catch up.
“The Chinese didn’t just show up with cheap, well-made EVs. They started 15 years ago. We’re just starting out.”
Burrows and other EV advocates take issue, though, with the lack of a sunset clause in the tariffs. If they were in place for a limited time — say, two to five years — with a clear end date, the tariffs would allow enough time to develop a North American supply chain and bring more inexpensive models to market. But as things stand now, they say, the tariffs coddle the domestic auto industry.
Because they’re not available in North America, few people are familiar with Chinese car brands and can say with authority if they’re any good, or if they’d sell in North America.
Kevin Williams, however, is one of those people. A reporter with InsideEVs.com, he travelled to Beijing to test drive Chinese EVs and says that, in his view, they’re so good, Western automakers are “cooked.”
“Chinese EVs are competitive in ways that go beyond just price,” he said. “They’re stylish, they’re wellmade and they work really well.”
Williams, who has not minced his words after test drives of lacklustre American EVs, says Chinese vehicles have bucked their reputation for inferior quality.
“For a long time, Chinese cars really weren’t great,” he said. “That isn’t true anymore.”
In the early 2000s, a lot of Chinese cars were simply cloned versions of Western cars that had been reverse-engineered. Then, in the late 2000s, automakers in China pivoted to EVs — or “new energy vehicles,” as they’re called there — and invested far more in their development. Now, 15 years later, Chinese manufacturers sell more EVs than all other car companies combined.
“They’ve been doing a lot of research and development, and refining their product to the point where now they’re the one of the biggest automakers in the world,” Williams said. “It didn’t happen in a vacuum. They didn’t just, all of a sudden, start making solid vehicles. It took a minute.”
Detroit-area company Caresoft Global, which takes apart cars to analyze how they’re built, tore down a BYD Seagull and was very impressed with the quality of its construction, especially for the price point. The company was similarly impressed with other Chinese EVs, and wrote, “The automotive landscape is set for a significant shift, driven by the rapid evolution of China’s electric vehicle industry and should serve as a wake-up call to legacy automakers.”
Williams said that if they were available in North America, there’s no doubt Chinese EVs would find eager buyers.
“Most consumers don’t care where the product comes from. I think if Americans or Canadians are ever given the opportunity to buy these vehicles, I think they would sell a lot stronger than a lot of Western automakers would think — and I think that’s really terrifying for them.”
One of the only places on Earth where Chinese EVs can compete head-to-head with Western vehicles is Australia, which has a freetrade agreement with China.
In Australia, Chinese-built EVs now control 80 per cent of the EV market, and Chinese brands are the most popular behind only Tesla.
John Cadogan, a veteran Australian automotive journalist and qualified mechanical engineer, is far less enthusiastic about Chinese EVs, calling them “a functional appliance.”
He says they’re good for people who can’t afford more expensive models, but can’t compete on quality.
“When you make anything cheaply, inevitably quality issues such as endurability and performance suffer,” he said. “Consumers are finding that out.”
But the line between Chinese EVs and others isn’t as clear as you might think, he said. Regardless of where they’re assembled, all EVs rely on numerous parts from China. From semiconductors to battery cathodes, even the raw minerals in batteries and the rare earths in electric motors, all cars — and especially EVs — are reliant on a supply chain controlled by China.
“It’s becoming very hard to differentiate what’s Chinese-made and what’s not,” he said.
As a result, as soon as EVs start rolling off the line in the U.S. and Canada, they’ll still be drawing from the Chinese supply chain, and that won’t change until new mines and refineries are up and running, a process that typically takes more than a decade.
With tariffs in place, and few used EV options, budget-conscious Canadians may remain in the internal combustion engine market. This means another eight years, on average, of paying private-sector oil companies to fuel up rather than (mostly) publicly owned utilities.
According to Corporate Knights’ analysis, utilities would receive $3.5 billion in additional revenue over the next decade from the charging of Chinese EVs alone — badly needed funds that could be used to expand the grid to support electrification of the economy.
Without Chinese EVs providing inexpensive options, EV sales aren’t growing fast enough to meet the federal government’s legislated 60 per cent sales target by 2030 and 100 per cent by 2035. Estimates put out by the Parliamentary Budget Office show that EV prices would need to drop by one third in order to meet the first target, echoing Scotiabank’s figures.
Coincidentally, the cheapest Chinese EVs retail in Europe for about one third less than the cheapest EVs available in Canada.
And while the U.S. and Canada’s 100 per cent tariff leaves no room for negotiation or improvement, the European Union’s 38 per cent tariff has already been dialed back on several models, following an investigation into state subsidies.
Being more open to addressing specific grievances with Chinese EVs could create an incentive for China to improve its labour and environmental practices while increasing access to cheaper EVs in Canada. In France, for example, EV rebates are dependent on the car’s carbon footprint — only vehicles made with clean energy qualify.
On the other hand, dropping the tariffs entirely and allowing Chinese EVs to flood the market isn’t a great option, observers say.
It would not only cede a critical industry to a geopolitical rival, it would support the objectionable labour practices and environmental degradation the Chinese EV supply chain relies on, not to mention open consumers up to potential spyware in their cars.
Instead, while market competition is good, government regulations — that is, limiting rebates to less-expensive EVs — could be necessary to drive down prices, says David Tracy, an automotive engineer and editor-in-chief of the Autopian, a car-focused online publication.
In the past, when the market has failed to protect consumers and the environment, the government has stepped up to make a difference, he said.
“I’m all about competition. But as someone who is well versed in automotive history, I’ve seen how really challenging automakers has led to great things. Throughout history, the greatest automotive innovations have been a result, oftentimes, of the government challenging automakers to improve.”
Fuel economy regulations in the U.S, for example, yielded cars that are more powerful, more reliable and more efficient than ever, he said.
“And that doesn’t happen naturally,” Tracy said. “I think if we just went by the market, it’s possible we’d still have carbureted automobiles without airbags.”
This article was written by Nick Carey and was published in the Globe & Mail on October 15, 2024.
Chinese EV giant BYD’s Sealion 7 is displayed on media day at the 2024 Paris Auto Show in France on Monday.
Chinese and European automakers went head-to-head at the Paris car show on Monday, with tensions running high as the EU gears up to impose hefty import tariffs on Chinesemade electric vehicles and the industry struggles with weak demand.
This year’s event – the largest car show in Europe – comes at a pivotal time. Struggling European automakers need to prove they are still in the game, while Chinese rivals are aiming to get a foothold in a competitive market.
There was some common ground, though, with executives from both regions warning about the dangers of EU tariffs.
“Who pays the bill? Consumers. So this makes people very concerned. It will stop poorer people from buying,” Stella Li, executive vice-president of Chinese EV giant BYD, told Reuters.
Stellantis chief executive officer Carlos Tavares, meanwhile, warned the tariffs would lead Chinese automakers to set up plants in Europe, adding to overcapacity in the region and leading some local manufacturers to close factories.
Nine Chinese brands including BYD and Leapmotor are unveiling their latest models at this year’s event, according to Paris auto show CEO Serge Gachot. That is the same as in 2022 when they made up almost half the brands present. This year, they account for only about a fifth of the brands thanks to a much stronger showing from Europe’s auto industry – a sign of its determination to defend its home turf.
Earlier this month, EU member states narrowly backed import duties on Chinese-made EVs of up to 45 per cent, meant to counter what the Brussels says are unfair subsidies from Beijing to Chinese manufacturers. Beijing denies unfair competition and has threatened counter-measures.
While Chinese automakers have criticized the EU’s move, they are pressing ahead with European expansion plans and so far none has said it will raise prices to cover the duties.
China’s GAC told Reuters on Sunday that the show marked the launch of its European ambitions, while compatriot Leapmotor said on Monday it aimed to have 500 points of sale in Europe by the end of 2025.
Chinese EV makers like BYD have so far priced their vehicles slightly below European rivals, giving them an advantage. That will also help offset lower margins at home. Like Japanese and South Korean automakers before them, they are also touting better equipment and offering more features as standard.
Yet even BYD, which already sells EVs across much of Europe and sponsored the European soccer championships this summer, still has relatively low brand recognition, so hopes to make a splash with the electric Sea Lion 07 SUV it is launching.
Newer Chinese entrants like Dongfeng, Seres and FAW are also showing off new models as they seek overseas EV sales to offset a weak home market and a vicious price war there.
The pressure is on to try to keep prices down in Europe too, as EV makers try to close the gap with cheaper gasoline cars.
“My personal view is we will achieve price parity in Europe in 2-3 years. Everybody, if you want to compete, you need to work hard towards that goal,” said Leapmotor International CEO Tianshu Xin.
China’s passenger vehicle sales rose 4.3 per cent in September from a year ago, snapping five months of decline with a boost from a government subsidy to encourage trade-ins as part of a broader stimulus package. Europe’s sales hit a three-year low in August.
In another blow for the EV market, the French government said on Thursday it would reduce its support for EV buyers, joining Germany which ended its subsidy scheme late last year.
Chinese automakers also need to do well in Europe because they have been shut out of the U.S. market. Europe’s automakers, meanwhile, have hit a rough patch, with Volkswagen, Mercedes-Benz and BMW all issuing profit warnings largely because of the weak Chinese market.
This article was written by Jim Stanford and was published in the Toronto Star on September 28, 2024.
Electric vehicles (EVs) are the leading wedge of the global auto conquest, accounting for one-quarter of exports last year and rising. China’s BYD Auto surpassed Tesla to become the world’s biggest EV seller.
Economists have run out of adjectives to describe China’s world-beating economic performance. But we need to invent some new ones. Because China is quickly rising to the top of yet another key segment of the global economy: automobiles. And the implications for Canada’s auto industry — our most important high-tech sector — are existential.
China became the world’s largest automobile producer in 2008, and its auto industry continues to put the pedal to the metal. Until recently, that growth was targeted at domestic car buyers. However, China has suddenly turned its awesome capacity toward the global market. Chinese vehicle exports quintupled since 2020, reaching almost five million units in 2023. China leapfrogged first Germany and then Japan to become the world’s largest car exporter. Exports are up another 40 per cent this year.
Electric vehicles (EVs) are the leading wedge of this global conquest, accounting for one-quarter of exports last year and rising. China’s BYD Auto surpassed Tesla to become the world’s biggest EV seller.
The implications for auto industries in other countries — including Canada — are staggering. Little wonder that governments are erecting guardrails around Chinese imports, including a new 100 per cent tariff in Canada (matching a similar U.S. move) and a new EU tariff.
China’s automotive success reflects its unique statedirected industrial strategy: replete with subsidies, widespread public ownership, controls on capital flows and strictly managed international trade. Thanks to this strategy, China has become a high-tech leader, not a low-wage exporter. It’s also supporting the fastest energy transition of any major country, dwarfing the rest of the world in new solar and wind energy investments.
These are all historic accomplishments. Traditional free-trade theory complains such practices are “unfair,” justifying interventions like tariffs. Of course, other countries (including the “free market” U.S.) do similar things — just less powerfully or effectively. Ultimately it doesn’t really matter how China’s auto industry became so successful. What matters is that its expanding exports now threaten millions of jobs in other countries.
Trade rules have long recognized that if sudden shifts in trade flows damage employment and incomes, governments can and should intervene (through various safeguard provisions) to keep trade balanced and mutually beneficial.
At any rate, “trade” is a euphemism when it comes to describing Canada-China commerce — which is pretty much a one-way street. In 2023, Canada had a $75billion deficit in manufactured goods trade with China. We import $7 from China for every $1 we send back the other way.
The situation in autos is even more precarious. Canada’s automotive imports from China more than doubled since 2020, reaching more than $6 billion in 2023. Our puny automotive exports to China (just $725 million last year) fell 22 per cent over the same time. Finished vehicles now make up almost half of automotive imports from China, compared with five per cent five years ago.
Canada has invested massively in supporting the domestic auto industry’s transition to EVs and components, like high-value batteries. It would be folly to undermine that progress in the name of cheaper imports. Given the closely integrated North American auto sector, matching the U.S. strategy is also sensible. So Canada’s new tariff is good for the economy. Ultimately, it’s also good for the environment.
Indeed, the transition to EVs will carry on just as quickly, without an open door for Chinese producers. Rebates to buyers, an expanded charging infrastructure and regulatory mandates (under which all new vehicles must be zero emission by 2035) are the main drivers of EV sales. And prices are falling fast, regardless of China, with several EV brands now selling for $40,000 (well under average new prices for conventional vehicles).
Perhaps most importantly, public support for decarbonization will crumble if protecting the environment comes to be associated with abandoning domestic industry. Careful research into the “China shock” (the surge in imports following China’s accession to the World Trade Organization in 1995) confirms its lasting damage to the economic and social fabric of traditional manufacturing areas, like the U.S. Midwest. Those hard-hit communities became ground zero for Trump-style populism and that, obviously, hasn’t helped environmental policy.
Successful climate policy must pair the economic opportunities of the sustainable economy with the phase out of fossil fuels.
In short, we need to build green vehicles, not just drive them.
JIM STANFORD IS A FREELANCE CONTRIBUTING COLUMNIST FOR THE STAR, BASED IN VANCOUVER. HE IS ECONOMIST AND DIRECTOR OF THE CENTRE FOR FUTURE WORK, A LABOUR ECONOMICS RESEARCH INSTITUTE WITH OPERATIONSIN CANADA AND AUSTRALIA. HE PREVIOUSLY SERVED AS ECONOMIST ANDDIRECTOR OF POLICY WITH UNIFOR, AND BEFORE THAT THE CANADIAN AUTOWORKERS. HE HOLDS A PH.D. IN ECONOMICS FROM THE NEW SCHOOL FORSOCIAL RESEARCH, AND A MASTER’S FROM THE UNIVERSITY OFCAMBRIDGE.
‘‘ Successful climate policy must pair the economic opportunities of the sustainable economy with the phase out of fossil fuels. — Jim Stanford
My Climate Change Website 