Over the weekend, China’s ambassador to Canada said that if Ottawa drops its tariffs on Chinese-made electric vehicles, it will drop agricultural tariffs on products like canola.Yves Herman/Reuters
There goes Team Canada.
The rock-solid group of premiers fighting as one in a trade war are being chipped apart, their united front undone not just by the threats of U.S. President Donald Trump but by the promises of the Chinese ambassador Wang Di.
Now Canada, caught in a trade war with two capricious superpower partners, is negotiating against itself. This country might as well put up a sign inviting bigger players to come to fleece us.
Over the weekend, Mr. Wang made a public offer: If Canada drops its 100-per-cent tariffs on Chinese-made electric vehicles, Beijing will drop its punishing tariffs on Canadian agricultural products, notably canola.
Two Prairie premiers, Saskatchewan’s Scott Moe and Manitoba’s Wab Kinew, jumped on the promise, calling on Prime Minister Mark Carney to take the deal – and upsetting the Ontario-based auto sector.
Ontario Premier Doug Ford said he understands Mr. Moe and Mr. Kinew are advocating for their provinces’ interests, “but there’s no damn way we should drop tariffs on China.”
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The president of the Automotive Parts Manufacturers’ Association, Flavio Volpe, had a pointier criticism of the two premiers for taking “the Chinese ambassador’s cue to throw us under the bus.”
“We’re spending all this time in an unprecedented two-front trade fight with the world’s two biggest economic superpowers and we’ve got to look around to see who’s going to let us down on our own team,” he said.
Not so long ago, Mr. Carney seemed to be working with a tight-knit, cohesive group of provincial premiers, with the occasional exception of Alberta’s Danielle Smith. That’s unravelling quickly.
Earlier this month, Ms. Smith’s push for a new oil pipeline to the Pacific had British Columbia Premier David Eby spitting. On Tuesday, Mr. Eby suggested Ottawa doesn’t take saving B.C. forestry jobs as seriously as saving Ontario auto and steel jobs. “Because Ottawa is in Ontario, because it’s beside Quebec, those provinces are often front of mind,” he said.
On one level, this is an inevitable reversion to premiers putting their constituents first. But fighting Team Canada sometimes means scoring on your own net.
China’s steep tariffs are clobbering the exports of canola seeds, oil and meal that usually bring in billions to Canadian farmers, particularly in the provinces led by Mr. Moe and Mr. Kinew. Pork farmers have been hit, too. There is understandable resentment that auto-sector protections rebounded onto agricultural producers.
But it’s not smart to snatch at Beijing’s offer to sacrifice one sector for the other.
China has for years repeatedly slapped trade barriers on Canadian canola or meat as leverage to demand what it wants. And then it has done so again.
The new promise to lift them can only be taken to be a capricious and temporary reprieve, one that will last only till China has new demands in a year, or two, or three. But the concession it wants on EVs could be a long-lasting blow to Canada’s auto sector.
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One reason that Ottawa slapped hefty tariffs on Chinese EVs – as did the United States and the European Union – is that the vehicles are subsidized and dumped onto foreign markets at low prices, undercutting “local” producers to gain market share. North American automakers aren’t ready for that.
In 2023, China’s share of the market in Mexico went from 5 per cent to 20 per cent in one year, Mr. Volpe said.
That kind of shift in the Canadian auto market could change the face of a sector already coping with Mr. Trump’s stated goal of seeing Canadian assembly plants move to the U.S. It could upend supply chains and lead manufacturers to close plants and wipe out a lot of jobs, and a chunk of Canada’s GDP.
Perhaps there could be some kind of compromise that can be made on EVs – the EU has sought to find one – but it won’t be worth much if China slaps tariffs on canola again in a year or two. There isn’t a good deal to be had unless it brings some kind of stable trade.
In the meantime, it’s best not to advertise desperation. Beijing knows that some provinces worry about auto jobs and others are concerned about oilseeds. And that the best way to press Canada is to have it negotiate against itself.
That seems to be getting easier as Team Canada falls apart.