Canada weighs trade crackdown on China over unfair practices & security concerns

Canadian Finance Minister Chrystia Freeland will meet with business and labour groups next week to discuss potential trade barriers against Chinese-made vehicles and to explore broader trade practices beyond the automotive industry.

This move follows the government’s recent public consultation on responding to “unfair Chinese trade practices” in the electric vehicle sector. Canada is closely watching the US and EU’s moves to impose tariffs on Chinese goods. Freeland emphasised the need for secure supply chains and a different approach to Chinese overcapacity.

Canada has no choice but to view its trading relationships through a national security lens, said Freeland, who’s also the deputy prime minister.

“Geopolitics and geoeconomics is back. That means that Western countries— and very much the US — is putting a premium on secure supply chains and is taking a different attitude towards Chinese overcapacity,” she said. “And that means that Canada plays an even more important role for the United States.”

The Canadian auto industry supports over 125,000 well-paying jobs and boasts the world’s top-ranked electric vehicle (EV) supply chain potential. To capitalise on this growth opportunity, the federal government is taking steps to ensure the long-term success of Canadian auto workers, according to reports.

However, the industry faces unfair competition from China’s deliberate overproduction and lack of robust labour and environmental standards. This has resulted in a global oversupply of electric vehicles, threatening the profitability of EV producers worldwide, including those in Canada.

In response, the government has launched a 30-day consultation from July 2 to August 1, 2024, to explore policy measures that protect Canada’s auto workers and EV industry from China’s unfair trade practices and prevent trade diversion following recent actions by Canada’s trading partners.

The government faces domestic pressure to protect local jobs and wages in the auto industry, while also promising subsidies to attract global automakers to set up electric-vehicle battery production in Ontario.

Freeland criticised China’s economic policies, suggesting a prevailing view that China’s entry into the WTO was a mistake, and emphasised the need for Western countries to be “clear-eyed” about China’s intentions.