The Canada-China trade deal announced early Friday puts the future of Canada’s entire automotive industry at risk and concedes ground to “hostile” players in the market, say Canadian automotive industry leaders.
“This is a self-inflicted wound to an already injured Canadian auto industry,” said Unifor national president Lana Payne in a press release reacting to news of the deal, which allows 49,000 Chinese EVs a year into Canada, at the “most-favoured nation” tariff rate of 6.1 per cent.
In exchange for backing away from its 100 per cent tariff on Chinese EVs, the Canadian government convinced China to cut its tariff on Canadian canola seeds from 100 per cent to 15 per cent. The deal also reduced tariffs on Canadian lobster, crab and peas.
But it’s still a grievous mistake, Payne warned.
“Providing a foothold to cheap Chinese EVs, backed by massive state subsidies, overproduction and designed to expand market share through exports, puts Canadian auto jobs at risk while rewarding, labour violations and unfair trade practices.”
The head of Canada’s Automotive Parts Manufacturers Association (APMA) said the deal undercuts a key sector in this country’s high tech manufacturing industry.
“It’s a concession by definition,” said APMA CEO Flavio Volpe. “We conceded about three per cent of the auto market and 35 per cent of the EV market to players who to date have been hostile to the Canadian auto sector.”
Volpe said he’s concerned that the deal announced by Carney has firmer details on the import quotas than it does on Chinese commitments to manufacturing in Canada.
“There are hard numbers on what they’re going to be allowed to bring in, but there are no hard details on local manufacturing,” said Volpe. “We should be confident enough that if the Chinese don’t bring the benefits they say they will, that we’ll walk away from this.”
While the biggest attraction of Chinese EVs has been their rock-bottom prices, that advantage would almost certainly disappear if they’re being manufactured in Canada, particularly if they meet Canada-U.S.-Mexico agreement rule of origin standards, argued Volpe.
“Their advantages are all related to importing vehicles. Making them here erases those advantages,” Volpe said.
Should Chinese EVs hit the market at under $35,000, as Carney indicated on Friday, their price would be dramatically lower than the current average for new battery-electric vehicles — $66,724 — and even below the average for used EVs, at $46,346, said Baris Akyurek, vice-president of insights and intelligence at Autotrader.ca.
“We are at a stage where consumers expect some sort of government subsidy in order to be able to buy these cars because they’re more expensive,” said Akyurek.
With the prospect of much cheaper Chinese EVs entering the market, demand for electric vehicles — which has waned in recent years — could rebound and may even draw buyers away from gas and hybrid models, said Akyurek.
“By how much, and how would that have an impact on overall prices? It’s something to be seen,” said Akyurek. “But it’s definitely going to shake up the industry a bit.”
Charles Bernard, lead economist at the Canadian Automobile Dealers Association, said the announced EV imports represent a small share of total cars being sold, and many customers may not notice a difference in pricing.
He noted, however, that much depends on how the government manages the quota, which brands are allowed in, and the timeline for their arrival — details that remain largely unclear.
“The number of units isn’t huge, but it sets a train in motion,” Bernard said. “That train is going to pick up steam quickly, and we need clarity on how it will interact with the dealer network.”
Veteran international trade lawyer John Boscariol said the deal left out other large trade irritants between the two countries, including hefty tariffs on Chinese steel and aluminum.
“There’s definitely some horse-trading going on,” said Boscariol, head of the international trade group at McCarthy Tetrault. “This kind of looks like a canola for autos deal.”
