Ottawa’s consultation for tariffs on Chinese EVs ends. What comes next?

In June, Finance Minister Chrystia Freeland told reporters that nan national authorities was concerned by “unfair” Chinese waste and acquisition practices successful nan electrical conveyance manufacturing sector. Freeland announced nan start of a consultation process, which ends connected Thursday.

While it is unclear erstwhile nan results of nan consultation will beryllium made public, immoderate experts opportunity 1 result is astir likely: accrued tariffs connected Chinese-made electrical vehicles.

The consultation began connected July 2 and is scheduled to extremity Thursday. While tariffs and a surtax connected Chinese-made EVs are apt to beryllium nan attraction aft nan U.S. imposed tariffs connected nan vehicles, Freeland said they are considering a scope of argumentation options.

“The imaginable argumentation actions we are consulting connected see a surtax connected imports of Chinese EVs nether Section 53 of nan Customs Tariff Act, changes to which cars are eligible for nan existing national incentives for Zero Emissions Vehicle Program, and perchance broader finance restrictions successful Canada,” Freeland said astatine nan time.

Freeland said nan measures were basal because of what she termed unfair waste and acquisition practices.

The announcement followed U.S. President Joe Biden’s announcement successful mid-May that he was hiking tariffs connected Chinese EVs from 25 per cent to 100 per cent this year, though location is only 1 Chinese EV presently disposable successful nan U.S.

Erik Johnson, elder economist astatine BMO Capital Markets, told Global News that he was looking for 2 awesome announcements successful nan coming days.

The first is an added surtax connected Chinese-made EVs imported into Canada, astatine slightest connected par pinch nan European Union. This would raise tariffs connected Chinese EVs from six per cent to 50 per cent.

He said he would besides look retired for restrictions to which vehicles are eligible for nan rebates connected zero-emission vehicles. Johnson said nan scope of nan rebate could beryllium constricted to cars made successful North America, pinch imaginable exceptions for manufacturers from Japan, South Korea and Europe.

Currently, nan only Chinese-made EVs imported into Canada are Teslas made astatine nan U.S. tech giant’s Shanghai factory.

Johnson said this could wounded Tesla income successful Canada.

“With request slowing for Tesla models this year, it was already going to beryllium a twelvemonth of modulation for artillery electrical vehicles successful North America, wherever they comprise nan bulk of sales. Sales should still extremity up higher than past year, though maturation conscionable won’t beryllium arsenic impressive,” he said.

Johnson said immoderate consumers are looking to downgrade to smaller, cheaper vehicles for illustration subcompact and compact SUVs amid nan cost-of-living crisis. However, nan smaller conveyance conception doesn’t person that galore EV options, he said.

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“One script would spot home producers commencement to capable that spread complete nan adjacent mates of years arsenic much models travel to market,” Johnson said.

Moshe Lander, economist astatine Concordia University, said if Canada does take to spell up and enforce tariffs, it would beryllium a governmental move, alternatively than an economical one.

“Canada has invested a batch successful nan industry, and they’re not yet seeing nan results. I deliberation that’s astir apt because of overinvestment. But you request immoderate measurement to screen yourself. So alternatively than opportunity we made a mistake, it’s almost easier to conscionable constituent to China,” he said.

In July, American car elephantine Ford said it was going to manufacture gas-powered trucks astatine its Oakville, Ont., facility, contempt nan provincial and national governments having spent billions of dollars to pull electrical automakers to Ontario arsenic portion of a bigger push to build those industries.

Meanwhile, Chinese automaker BYD said it was readying an EV manufacturing installation successful Mexico.

Some experts interest that this mightiness beryllium to beryllium a backdoor into nan American and Canadian markets.

“Another imaginable script would beryllium a further hold by home producers successful bringing much models to market, but that could consequence them being caught disconnected defender if Chinese automakers for illustration BYD unfastened North American accommodation and commencement trading into nan North American marketplace tariff-free,” Johnson said.

Lander said while Canada cannot deviate overmuch from American waste and acquisition policy, it tin besides not spend a waste and acquisition warfare pinch China and that fixed that astir of nan vehicles produced successful Canada are sold successful nan United States, it would beryllium difficult for nan car manufacture — some electrical and gas-powered — to execute standard successful Canada.

“The full car industry, EV aliases otherwise, is doomed for a monolithic standard back,” he said.