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Canada-China Trade: Ottawa considers scrapping Chinese EV tariffs.
The possibility of Ottawa considering the removal of tariffs on Chinese electric vehicles (EVs) has sparked a flurry of opinions, reflecting both optimism and caution. The driving force behind this consideration seems to be the potential to lower car prices, which have skyrocketed in Canada since the COVID-19 pandemic. With the cost of vehicles becoming a significant burden for many, the appeal of more affordable options, particularly EVs, is understandable. One compelling argument revolves around the potential to drive down prices of EVs, which currently range from $45,000 for domestic models, down to potentially $27,400 or even $13,800 with the removal of tariffs. For those seeking to get into the EV market, the difference between a $40,000 vehicle and one closer to $20,000 is very significant, potentially opening access to green transportation for a larger segment of the population.
There’s a clear recognition that the current situation in the automotive market isn’t ideal. Many feel North American manufacturers are producing substandard vehicles and that competition is needed to spur innovation and better quality. The arrival of Chinese EVs could be the catalyst for this competition, forcing North American manufacturers to step up their game. Some see this as a much needed shakeup of the market, and others believe this is a critical step towards decarbonizing. The perspective is that the benefits would be realized by both the consumers and the environment, and that there is little existing incentive for the domestic manufactures to improve.
However, the discussion isn’t without its complexities. A major point of concern is the potential impact on Canada’s existing automotive industry. Some worry that the removal of tariffs, without corresponding measures, could lead to the closure of Canadian operations by the “Big Three” automakers (Ford, General Motors, and Stellantis), resulting in job losses and a decline in manufacturing expertise. A suggested solution involves encouraging Chinese manufacturers to establish factories in Canada, which would not only create jobs but also facilitate the transfer of skills and technology. The ask for reciprocity, where Canadian cars are granted similar access to the Chinese market, highlights the importance of fair trade practices.
The backdrop of evolving geopolitical relationships adds another layer of complexity. With Canada-U.S. relations under strain and the broader geopolitical landscape increasingly volatile, some express apprehension about relying on China for critical goods like vehicles. Concerns about potential espionage or the use of kill-switches in Chinese EVs are also raised, underscoring the need for careful consideration of national security implications. Additionally, there is the worry of how this move may affect the Canola farmers given that China’s tariffing of Canola was in retaliation for Canada’s EV tariffs.
On a more granular level, there are practical considerations such as the need for vehicle approval for Canadian roads, which highlights the importance of standardization and safety compliance. While there’s the potential for a win-win-win situation, one must still acknowledge that any business will be in the business of making money, and could potentially exploit the Canadian consumer base. However, in comparison to the current prices, this seems a worthwhile tradeoff.
One of the main driving forces behind the desire to remove the tariffs is the belief that the U.S. is not looking out for Canada’s best interests and that allowing Chinese EVs will improve relations and access for Canadian crops like Canola. The sentiment that the U.S. is hurting Canada and that it is being treated as an enemy is echoed throughout the comments. There is a strong sense that the status quo is unsustainable and that innovative changes are required.
Ultimately, the decision to scrap the tariffs on Chinese EVs is a complex one, requiring a careful balancing act between economic benefits, geopolitical realities, and national security concerns. The outcome of this consideration will undoubtedly have far-reaching implications for the Canadian automotive industry, consumer affordability, and Canada’s relationship with both China and the United States. The overwhelming sentiment, however, is that if the conditions are right, then it’s a no-brainer.