Canada’s finance minister says he will hold talks next week with business and labor groups about erecting trade barriers against Chinese-made vehicles — and suggested the government may go beyond cars.
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Published July 13, 2024 • Last updated 1 hour ago • 3 minutes of reading
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(Bloomberg) — Canada’s finance minister said he will talk next week with business and labor groups about creating trade barriers against Chinese-made vehicles — and suggested the government may go beyond cars.
The government last month announced a public consultation on how to respond to China’s “unfair trade practices” of electric vehicles. But “the consultation could be much more than that,” Finance Minister Chrystia Freeland said in an interview Friday with Bloomberg News.
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Canada, which is heavily dependent on bilateral trade with the US, has been closely watching the Biden administration’s move to impose higher tariffs on Chinese EVs, solar cells, batteries, steel and other products.
Canada has no choice but to view trade relations through the lens of national security, said Freeland, who is also deputy prime minister.
“Geopolitics and geoeconomics are back. It means that Western countries – and very much the US – put a premium on secure supply chains and take a different stance on China’s overcapacity,” he said. “And that means Canada has a more important role for the United States.”
Freeland, who is of Ukrainian heritage, pointed to a statement this week by the North Atlantic Treaty Organization that China is the “defining enabler” of Russia’s war against Ukraine. “What NATO said this week about China is important,” the minister said. “I would urge people to pay attention.”
Prime Minister Justin Trudeau’s government is seeking to align itself with its Group of Seven allies after the Biden administration announced plans to raise tariffs on Chinese goods and the European Union announced new levies of up to 48% on Chinese vehicles. Canada currently imposes a 6% levy on Chinese vehicles.
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Bloomberg News first reported last month that Canada was preparing to increase tariffs on Chinese-made electric vehicles, following moves by the US and the EU. Public consultation is the first stage of the process. China, which has denied accusations from Western countries that it is flooding the market with cheap goods, has also said the tariffs could damage trade and economic cooperation between Beijing and Ottawa.
The government is also facing domestic pressure. It has promised billions in subsidies to lure global automakers such as Volkswagen AG and Stellantis NV to set up electric vehicle battery production in the province of Ontario to supply North American assembly plants. Canada’s auto industry is also pushing for barriers to Chinese electric vehicles to protect local jobs and wages, arguing that Chinese products are cheaper because of weaker labor standards.
“For me, the workforce is a very important piece of the puzzle and I think it’s overdue,” he said. “China is a centrally planned communist economy and China has a state-directed policy of overcapacity.”
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The Trudeau government has been fighting a series of diplomatic and trade wars with China – its second largest trading partner after the US – notably when Canada arrested Huawei executive Meng Wanzhou on a US extradition warrant. China retaliated by detaining two Canadian citizens for nearly three years.
Freeland, however, pulled no punches when talking about China there. There is a widespread view that China’s entry into the World Trade Organization more than two decades ago was a mistake, he said.
“I see Leninist precepts in China’s economic policy – dominating the height of the global economy and acting deliberately to undermine and eliminate Western competitors,” he said. “I think it’s time for us to be clear on this.”
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