Auto, steel groups urge Canada to match US tariffs on China

Auto manufacturers, steel producers and union officials urged Canadian lawmakers to hike tariffs on over-produced Chinese goods, warning Canada risks being seen as a weak partner on China by the US administration.

Earlier this month, US President Joe Biden announced a sweeping set of tariff hikes on Chinese goods, including quadrupling tariffs on Chinese electric vehicles to bring its rate up to 102.5%. By contrast, Canada currently imposes a small tariff of about 6% on Chinese vehicles.

Prime Minister Justin Trudeau and other Canadian officials have said they are monitoring the American tariff policy, but have not committed to following suit.

Industry groups testifying at a parliamentary committee this week urged Canada to bring its tariff policy in line with the US ahead of a scheduled 2026 review of the North American free trade pact, known in Canada by the acronym CUSMA.

“Canada cannot be out of step with its largest trading partner and strongest ally on China as we approach the CUSMA review,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association.

“There is simply too much at stake for the automotive industry and broader Canadian economy if Washington perceives Canada as misaligned,” Kingston said. “We should be prepared to strengthen our trade defenses in response to a surge in dumped Chinese EVs into the market.”

Canada has poured billions of dollars into building a domestic electric vehicle supply chain, promising to match subsidies in the US Inflation Reduction Act to lure manufacturers including Stellantis NV and Volkswagen AG. But those plants are in the early stages of construction, and currently Canada is seeing a surge of imports of Chinese-made EVs — nearly all Tesla Inc. models made in Shanghai.

Trudeau has set ambitious environmental targets, including mandating that all light-duty vehicles sold in the country be zero-emission by 2035. Reaching that goal will require a significant increase in the supply of electric vehicles.  

Unifor, the largest autoworkers union in Canada, also pushed lawmakers to take stronger action against China. Angelo DiCaro, the union’s director of research, said China is purposefully over-producing electric vehicles “for the express purpose of flooding the global market with cheap exports.”

“This goes beyond any conversations about competitiveness on cost,” DiCaro said. “This is about a country and an industrial model that is built on baked-in subsidies. Not just unfair labor, but forced labor, things that we wouldn’t tolerate in Canada.”

The same holds true for China’s steel production, said Catherine Cobden, president of the Canadian Steel Producers Association.

“As our major trading partners move to block or restrict high-carbon excess steel from entering their national markets, we believe Canada remains vulnerable to more Chinese steel,” Cobden said, adding that China remains the third largest exporter of steel into Canada.

Canadian Finance Minister Chrystia Freeland told reporters this week that China is intentionally producing excess supply and said the government cannot “let Canadian industry be wiped out by Chinese oversupply and overcapacity.”

But while she pledged Canada would not allow itself to be a trade conduit for dumped Chinese goods, she did not commit to any action beyond reviewing the trade measures Canada currently has in place.