Automotive
Ottawa’s tariffs undercut Ottawa’s EV mandate
From the Fraser Institute
Asian countries such as China and Japan were not particular threats to prior automotive markets because North America’s massive and diverse internal combustion vehicle markets were capable of relatively lower-cost production of superior quality vehicles. That’s not shaping up to be the case for EVs, which are vastly more expensive coming off North American assembly lines than in China and other Asian countries.
Seemingly every week, Canada’s electric vehicle (EV) transition policy framework grows more incoherent. The goal of Canada’s EV policy is to ensure all new light-duty vehicle sales in Canada are zero-emission vehicles (ZEVs), with a strong emphasis on battery-electric vehicles, by 2035.
The latest incoherence is Prime Minister Trudeau’s announcement of 100 per cent tariffs on Chinese EV imports and 25 per cent tariffs on Chinese steel and aluminum imports (the Canada needs to build EVs). This will directly undercut the government’s EV transition targets by denying Canadians access to affordable electric cars.
The stated rationale for the tariffs is, according to Finance Minister Chrystia Freeland, that the “Chinese are trying to corner the North American EV market by dumping subsidized vehicles into it” and that “China has an intentional, state-directed policy of overcapacity and oversupply designed to cripple our own industry” so “we simply will not allow that to happen to our EV sector.” And arguably, some of that is probably reasonable.
Tariffs are generally understood as protectionist mechanisms, designed to shield domestic industries from lower-cost foreign competition by making imported goods more expensive. Additionally, they can serve as punitive measures to penalize countries for hostile economic or political actions. By limiting access to one’s markets, tariffs can reduce the profits of the targeted country, thereby pressuring it to alter behaviours or policies. When imposed against countries intentionally sabotaging markets, tariffs may be considered a legitimate response.
But tariffs on China will also hurt Canadians by keeping lower-cost goods out of our market, leaving them with only higher-priced goods and services provided by protected domestic industries that need not fear price competition and thus feel little pressure to lower the prices for their goods and services.
And this is part of the incoherence of the new Trudeau tariff policy. The Trudeau EV mandates are set to create, in essence, a monopoly on the types of automotive technologies (again, EVs) allowed to be used in Canada, which other countries can manufacture more cheaply than domestic manufacturers. Asian countries such as China and Japan were not particular threats to prior automotive markets because North America’s massive and diverse internal combustion vehicle markets were capable of relatively lower-cost production of superior quality vehicles. That’s not shaping up to be the case for EVs, which are vastly more expensive coming off North American assembly lines than in China and other Asian countries.
By driving up the costs of buying EVs in Canada, the Trudeau government will directly undercut its EVs-by-2035 mandate. If people can’t afford EVs, as most currently cannot, the EV mandate targets are doomed. People will simply hold their old internal-combustion vehicles for longer. This trend is already observable in the United States where new vehicles have become more expensive. Americans are holding on to their vehicles longer than ever, with the average vehicle age reaching 13.6 years.
The Trudeau government’s highest priority has been the war on climate change, which various government leaders in Canada and around the world have proclaimed the greatest threat to people and the planet in human history. But if the government is sincere about this, then the priority should be to maximize Canadians’ access to cheaper EVs, and the prime minister should be largely indifferent to where Canadians choose to source those EVs. Indeed, he should urgently want low-cost EVs available to Canadians for there to be any hope of achieving his all-EV by 2035 goal.
Author:
From the Montreal Economic Institute
Seven in 10 Canadians are concerned about the negative impact of cancelled energy projects on Canadian jobs.
More than half of Canadiens are against the federal mandate forcing all new cars sold in Canada to be electric by 2035, shows a new MEI-Ipsos survey released this morning.
“Across the country, Canadians are a lot more hesitant to ban conventional vehicles than their elected representatives in Ottawa are,” said Krystle Wittevrongel, director of research at the MEI. “They have legitimate concerns, most notably with the cost of those cars, and federal and provincial politicians should take note.”
The poll shows that 55 per cent of Canadians disagree with Ottawa’s decision to ban the sale of conventional vehicles by 2035. In every region surveyed, a larger number of respondents were against the ban than in favour of it.
Among Canadians who don’t already own an electric vehicle, slightly fewer than one in four said their next car would be electric.
Key reasons cited for this lukewarm attitude included the high cost of the cars (70 per cent), the lack of charging infrastructure (66 per cent), and their reduced performance in Canada’s cold climate (64 per cent).
Across the country, only 26 per cent of Canadians believe Ottawa’s plan to ban the sale of conventional vehicles is realistic. Meanwhile, 66 per cent maintain that the plan is unrealistic.
“Canadians understand that 2035 is sooner than Ottawa thinks, and nothing indicates electric vehicle adoption rates are going to follow what federal lawmakers anticipated,” notes Ms. Wittevrongel. “Concerns with their high cost, the lack of charging infrastructure and their poor performance in our cold climate remain strong.”
The survey also found Canadians were troubled by the effects that federal legislation has had in stalling or cancelling energy projects.
Seven in 10 respondents were concerned by the negative impact on Canadian jobs arising from the cancellation of tens of billions of dollars in energy projects due to regulatory hurdles.
Slightly more than three in four Canadians (76 per cent) say the federal government’s environmental impact assessment project takes too long, with only nine per cent taking the opposite view.
“Canadians understand that our energy industry plays a key role in Canada’s economy, and that lengthy approval delays from regulators have a negative impact on a project’s chances of happening,” explains Ms. Wittevrongel. “They are looking for leadership in Ottawa and in the provinces to cut down on bureaucratic hurdles and shorten the time it takes to get shovels in the ground.”
A sample of 1,190 Canadians 18 years of age and older was polled between September 18th and 22nd, 2024. The results are accurate to within ± 3.3 percentage points, 19 times out of 20.
The results of the MEI-Ipsos poll are available here: https://www.iedm.org/wp-
The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
From the Fraser Institute
By Matthew Lau
The study covered grocery bags, food packaging, soft drink containers, furniture, t-shirts and other plastic products. In most cases, replacing plastics with alternatives causes greenhouse gas emissions to rise by 35 to 700 per cent.
Through a variety of regulatory and spending initiatives, the Trudeau government is expanding its control over our lives, often in the name of climate change or other environmental objectives. For example, the government plans to force consumers to buy electric vehicles instead of conventional cars and has proposed or implemented plastics restrictions on consumers and businesses—everything from plastic drinking straws and plastic utensils to clothing material and food packages.
However, while evidence of the high costs to consumers continues to mount, evidence of the environmental benefits is notably absent. Indeed, many recent studies provide evidence that Ottawa’s restrictions on consumers may well cause net environmental harm. One reason is that the plastic products the federal government is so intent on restricting are more environmentally efficient than alternatives.
A study published earlier this year in the journal Environmental Science & Technology concludes, “15 of the 16 applications a plastic product incurs fewer greenhouse gas emissions than their alternatives.” The study covered grocery bags, food packaging, soft drink containers, furniture, t-shirts and other plastic products. In most cases, replacing plastics with alternatives causes greenhouse gas emissions to rise by 35 to 700 per cent.
Why? Because plastic generally takes less energy to manufacture and transport than the alternatives. In fact, many plastic products that are more environmentally friendly than non-plastic alternatives (according to the study) are products the Trudeau government wants to ban or curtail through regulation.
Other evidence shows plastic bans of the type imposed in Canada cause environmental ruin, contrary to the predictions of politicians. For example, research in New Jersey found after single-use plastic bags were banned in 2022, shoppers switched to the heavier reusable bags. “Owing to the larger carbon footprint of the heavier, non-woven polypropylene bags,” reported the Wall Street Journal, “greenhouse gas emissions rose 500%.”
Similarly, the New York Times reported that while California banned single-use plastic bags almost a decade ago, in 2023 “Californians threw away more plastic bags, by weight, than when the law first passed, according to figures from CalRecycle, California’s recycling agency.”
Also from the Wall Street Journal, analyses suggest electric vehicles often emit more particulate pollution (dust, dirt and soot) than conventional vehicles. That’s because most particulate pollution these days is not from the tailpipe but from tire wear. EVs are much heavier than conventional vehicles so their tires wear out faster, increasing particulate pollution. The firm Emissions Analytics compared a plug-in electric to a hybrid vehicle and found the plug-in electric, which weighed more, emitted about one-quarter more particulate matter than the hybrid as a result of tire wear.
Last year, the chair of the U.S. National Transportation Safety Board noted that EVs manufactured by Ford, Volvo and Toyota were all about 33 per cent heavier than conventionally powered versions of those same vehicles. That’s a problem not only for the environment but also for driver safety—and yet more evidence that the Trudeau government’s EV mandates will harm Canadians.
When it comes to vehicles, plastic products and many other things, the Trudeau government should begin reducing its control over consumers. The harm to consumers is evident; the compensating benefits to the environment—if any—are not.
Author:
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