On Tuesday, May 28, Canadian Finance Minister Chrystia Freeland stated that Canada will not allow itself to become a trade conduit for China’s excess capacity goods in order to prevent cheap Chinese goods from flowing through Canada to democratic allies.
Bloomberg reported that Freeland told reporters on Tuesday, “Canada is fully aware that China’s intentional, state-driven economic policies have led to overcapacity and oversupply in certain industries.” She emphasized that China has not “played by the rules” in sectors such as steel, aluminum, some key minerals and metals, and manufacturing products.
“We cannot allow Canadian industries to be destroyed by China’s oversupply and overcapacity policies,” she said.
However, she did not commit to following the U.S. approach of significantly raising tariffs on Chinese goods. She indicated that Canada is currently reviewing its trade measures with China.
According to Bloomberg, the trade volume between Canada and China is approximately 127 billion Canadian dollars, while the total trade volume of G7 countries (excluding the United States) is around 132 billion Canadian dollars.
Freeland mentioned that Canada and G7 countries have all signed free trade agreements. “Canada will not become a country that can facilitate the transit of cheap Chinese goods, and we are very cautious about this,” she said.
Starting in August this year, the U.S. imposed tariffs on Chinese-made electric vehicles have increased fourfold, with rates as high as 102.5%, and imposed significant tariffs on other products including semiconductors and solar panels. Currently, Canada imposes a small tariff of about 6% on Chinese automobiles.
Since the U.S. implemented tariff measures, Canadian Prime Minister Trudeau, Minister of Industry François-Philippe Champagne, and Minister of Trade Mary Ng have all expressed willingness to impose tariffs, but none have committed to following the U.S.
On May 21, shortly after meeting with U.S. Vice President Kamala Harris in Philadelphia during the American Federation of Government Employees conference, Trudeau said, “We are closely monitoring the actions of the Americans.”
Trudeau’s staff stated that economic ties and supply chains were an important part of the discussion. In recent years, both Canada and the U.S. have been adjusting their electric vehicle industries, including critical minerals, batteries, and electric vehicle manufacturing itself.
According to the Canadian Press, currently, Chinese brands do not dominate the Canadian electric vehicle market. However, due to Tesla moving its production for Canada from the U.S. to Shanghai, the number of electric vehicles imported from China to Canada surged last year. Currently, Tesla holds nearly a third of the Canadian electric vehicle market share. This has made China the second-largest source country for Canada’s electric vehicle imports, reaching 2.8 billion dollars.