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Ottawa, Ontario

Canadian workers, the auto sector, and related critical manufacturing supply chains currently face unfair competition from Chinese producers, who benefit from China’s intentional, state-directed policy of overcapacity and lack of rigorous labour and environmental standards. This unfair competition threatens Canadian workers and businesses, and those around the world, and undermines Canada’s long term economic prosperity.

The federal government has taken action to level the playing field for Canadian workers across Canada’s EV industry, and is considering further measures to protect related critical manufacturing sectors, to ensure Canadian businesses can compete in domestic, North American, and global markets.

On August 26, 2024, following a first 30-day consultation, the Government of Canada announced it will be implementing a 100 per cent surtax on all Chinese-made EVs, effective October 1, 2024, and a 25 per cent surtax on imports of steel and aluminum products from China, effective October 15, 2024. The same day, the government also announced it would launch a second 30-day consultation on related critical manufacturing sectors, including batteries and battery parts, semiconductors, solar products, and critical minerals.

To that end, Canada is today launching a second 30-day consultation, from September 10, 2024, to October 10, 2024, on potential surtaxes in response to unfair Chinese trade practices. Specifically, the Government of Canada is seeking views on the potential application of a surtax on critical mineral products, batteries and parts, solar products, and semiconductors, as well as the timing of the coming into force of any potential measures. These measures would build upon those announced on August 26.

Canada is committed to reaching net-zero emissions by 2050. Investments in critical manufacturing sectors, such as batteries, semiconductors, solar products, and critical minerals are essential to achieving this goal.

Quotes

“Our economy needs fair competition in global markets to grow and ensure Canadian workers prosper. If left unchecked, China’s intentional, state-directed policy of overcapacity and other non-market practices could lead to an exponential surge of imports, produced with weak labour and environmental standards. This would undermine the ability of Canada’s EV industry and related critical manufacturing sectors to compete at home and abroad. That is why we are acting—in tandem with our key trading partners—to level the playing field and protect Canadian workers.”

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

“Canada has a proud manufacturing history, an abundance of critical mineral resources, a highly skilled workforce, and world-class environmental, social and governance standards. Globally, Canada is regarded as a strategic partner and a reliable source of high-quality critical minerals that are necessary for the transition to a net-zero economy. That is why our government is taking concrete action, by launching this consultation, to make sure we continue to strengthen our domestic supply chains and bolster access to critical commodities.”

The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry

“The consultations announced today are another step in the Government of Canada’s commitment to level the playing field for Canadian workers and businesses facing unfair trade policies in critical sectors.”

The Honourable Mary Ng, Minister of Export Promotion, International Trade and Economic Development

“The Government of Canada is supporting our industries and workers in moving quickly to build strong critical mineral, electric vehicle, and clean technology value chains that can compete, and that our global partners can rely on. As we seize the enormous economic opportunities presented by the transition to a low-carbon future, we are taking necessary actions to stand up to China’s unfair trade practices and protect Canadian workers in sectors critical to our economic, environmental, and energy security.” 

The Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources

Quick Facts

  • The Government of Canada has a net-zero economic plan that will invest over $160 billion, including an unprecedented suite of major economic investment tax credits. 
    • Despite global economic headwinds, public markets and private equity capital flows into Canada's net-zero economy have grown in recent years, reaching $14 billion in 2023.
  • Since 2020, China has emerged as the largest manufacturer and exporter of EVs in the world, and its capacity continues to grow, as a result of policies such as extensive state subsidies and other non-market practices. In 2023, China’s annual EV exports totalled $47.2 billion, up from $0.2 billion in 2018. 
    • China’s unfair trade practices include weak standards across EV supply chains, including poor labour standards, a lack of environmental protections, and trade policies supporting oversupply.
  • Investments in manufacturing sectors critical to Canada’s future prosperity and the net-zero transition, such as batteries, semiconductors, solar, and critical minerals are jeopardized by China’s non-market practices and weak standards across its supply chains. For example:
    • According to BloombergNEF, in 2023 China’s battery production was on its own sufficient to meet total global demand.
    • The International Energy Agency estimated that the Chinese government and Chinese firms have invested over US$50 billion in new solar production capacity since 2011, and it now accounts for over 80 per cent of manufacturing in all stages of solar panels globally.
    • China’s manufacturing capacity in semiconductors is expected to more than double in five to seven years, according to Barclays’ analysis of Chinese manufacturers’ development plans, leading to an anticipated over-supply in the market as early as 2026.
    • According to the International Energy Agency, China is the dominant producer and processor of critical minerals essential to the net-zero transition. China processes over half of all lithium, cobalt, graphite, and rare earth elements.
  • Key likeminded trading partners have identified similar concerns with Chinese policies and practices in sectors critical in the net-zero transition, including the commitment from G7 Leaders in June 2024 to “acting together to promote economic resilience, confront non-market policies and practices that undermine the level playing field and our economic security, and strengthen our coordination to address global overcapacity challenges.” 

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