Economist thinks Canada must choose between protecting auto sector or environment

Canadians have until midnight Thursday to weigh in on whether Canada should impose tariffs on electric vehicles made in China.

On July 2, the federal government launched a 30-day consultation period in response to “unfair Chinese trade practices in the field of electric vehicles.”

According to the consultation website, the government accuses China of a “deliberate state-driven policy of overcapacity and a lack of strict labor and environmental standards.”

“It’s important that we put something in place to stop the Chinese,” Flavio Volpe, president of the Automotive Parts Manufacturers Association, told CTV News this week. “The Chinese are ready to flood our markets at a time when Western companies are worried about profitability.”

Volpe fears that Canada will become like Australia if import duties are not imposed on Chinese electric cars.

“(Australia) had a healthy domestic (automotive) market and then decided to open it up to the Chinese. And there are no Australian automakers, only Australian automakers,” Volpe said.

Unifor, Canada’s largest union representing thousands of auto workers, released its proposal to the government on Thursday night.

Unifor is calling on Canada to match the tariffs announced by the United States, which include 100 percent tariffs on vehicles and 25 percent on battery and material imports.

“Working communities across Canada have been hurt before by governments that signed unfair trade agreements or failed to listen to workers and organized labour,” National President Lana Payne wrote in a press release. “Canada must implement these recommendations to protect good auto jobs and build a more prosperous, fairer, cleaner and more resilient economy for all.”

“You have to make a choice, government,” argues Carleton University economist Ian Lee. “Is it to save the auto industry in this EV segment? Or is it to go 100 percent clean EV green by 2035? You can’t have both.”

Lee said Thursday that Canada is at least 10 to 15 years behind China when it comes to electric car production.

“They’re sleek. They’re high-tech. They’re efficient and they’re much more competitive in price,” he said.

Even if Canada imposes tariffs on Chinese electric cars, Lee predicts domestic products will not become cheaper.

“We’re talking about $60, $80, $100 (thousand dollars). The Chinese are building mass-market electric vehicles from $15,000 to $25,000.”

By imposing tariffs on Chinese imports, these products become unaffordable for the middle class, he said.

“You raised the tariffs to push that $25,000 Chinese EV up to $50 (thousand dollars). And now you’ve turned most of the middle class out of the auto industry,” Lee said. “That’s sabotaging your policy of having everyone buy an EV by 2035.”