Canada and China are talking at last about ending the trade war between the two countries. An end to the hostilities can’t come soon enough.
Thousands of Canadian farmers and fishers stand to lose billions of dollars in revenues from tariffs Ottawa imposed on China last year, triggering retaliatory tariffs by China on imported Canadian agricultural goods.
The trade conflict is causing injury to Prairie farmers and to fishers on both the Atlantic and Pacific coasts. And the war is pointless.
Prime Minister Mark Carney and Chinese Premier Li Qiang have agreed to launch high-level talks to resolve the conflict.
“The Canadian government is engaging with its Chinese counterparts at the ministerial level and we’ll continue those discussions,” Carney said on June 2. “They’re a top priority for us.”
With luck the negotiators will achieve a breakthrough in coming months.
Ottawa started this second trade dispute, overshadowed by the Trump administration’s predations on Canada’s economy and sovereignty.
In October, the Trudeau government imposed a 100 per cent tariff on imported Chinese electric vehicles (EV). At the same time, it placed duties on Chinese steel and aluminum imports.
China retaliated in March with tariffs on nearly $4 billion worth of imported Canadian agricultural products.
China imposed a 100 per cent tariff on certain canola products and dry peas, and 25 per cent duties on selected Canadian fish, seafood and pork products.
Canola producers, concentrated in Saskatchewan, stand to lose about $1 billion in revenues from a tariff-induced drop in sales.
And the Fisheries Council of Canada estimates that Canadian fishers have lost about 83 per cent of their export market from the Chinese tariffs combined with those of the Trump administration.
The premiers of Saskatchewan and B.C. have openly lobbied Ottawa to lift its tariffs on China.
The dispute has taken a toll on national unity.
Western Canadian farmers regard the tariffs on China as a measure to protect the Ontario-based auto sector at their expense.
Which is true.
Ottawa felt obliged to act in lockstep with a Biden administration that imposed 100 per cent tariffs on Chinese EVs and a wide range of other Chinese imports earlier last year.
Canada’s protectionism was in defence of an integrated continental auto sector that Biden’s successor, U.S. President Donald Trump, means to destroy by relocating Canadian vehicle production to the U.S.
Not that the Canadian tariffs ever made much sense.
China’s biggest EV makers were focused on their enormous home market and Europe and Latin America.
And effectively banning affordable high-quality Chinese EVs that have been taking market share from the likes of Mercedes-Benz in China reduces Canada’s chances of meeting its zero-emissions targets.
Canada has also been drawn into the great-powers struggle between the U.S. and China, aligning its trade policy with a U.S. government now hostile to Canada.
Western automakers are not yet able to compete with the $13,000 Seagull, a flagship of China’s biggest automaker, BYD.
The lowest Canadian prices for EVs made by Western automakers range from $40,000 (Fiat 500e) to $53,000 (Ford Mustang Mach-E), according to Driving.ca.
Some industry experts say the absence of Chinese EVs from the Canadian and U.S. markets holds back Western automakers from adopting the design and advanced manufacturing methods of their Chinese rivals.
And if Trump closes the U.S. market to Canadian-made vehicles, they will have to compete with Chinese EVs in non-U.S. markets.
BYD is no stranger to Canada, having sold buses to transit operators across the country assembled at a plant in Newmarket, Ont. But BYD was dissuaded from passenger vehicle sales in Canada by the prohibitive tariffs.
Wang Di, China’s ambassador to Canada, said last week that Canada’s trade war with his country is holding back intended Chinese investment in Canada.
Let’s call him on that.
Canada could scrap its duties on Chinese steel and aluminum. And it could set quotas that allow a limited number of vehicles in the Canadian market from BYD, Chery Automobile, Geely Auto and other Chinese automakers.
Canada could set quotas or reduce the tariff to, say, 50 per cent, or both.
In time, the quotas and remaining tariffs would be removed as Western automakers reduce their production costs and showroom prices.
And if, as Wang says, BYD and other Chinese firms are interested in investing in Canada, let’s welcome their proposals to build vehicle assembly or EV battery plants in Canada.
Carney is embarked on a fence-mending tour that has seen him make personal entreaties with Saudi Arabia, India and China.
Closer to home, Carney could reinforce national unity, fight climate change, provide Canadian motorists with more choice during a cost-of-living crisis, and boost foreign investment capital in Canada with just one set of successful trade negotiations with China.
If we are to take Wang at his word, Carney would be pushing on an open door in getting that done, and soon.
